MS.MI - Mediaset

[Packer16]

I am starting to look at this one and it appears to be cheap and has some good upside.  Mediaset is the largest TV broadcastor in Italy and large player in Spain.  It also has a towers division.  The tower group generates about 90 million euro in EBITDA with the Italian broadcastor generating 1,174 million euro and the Spanish broadcastor generating 312 million euro. All of this for an MVIC value of 3,200 million euro.  If the towers are valued at 10x EBITDA, the implied value of the remainder is 2.8x EBITDA and 1.8x FCF with very little leverage.  Also, Tweedy, Browne and IVA holds large stakes.  I have no insight into the specifics of Italian and Spanish politics and the relation to media firms.  Does anyone have any insight on these issues?  TIA.

 

Packer

[twacowfca]

I am starting to look at this one and it appears to be cheap and has some good upside.  Mediaset is the largest TV broadcastor in Italy and large player in Spain.  It also has a towers division.  The tower group generates about 90 million euro in EBITDA with the Italian broadcastor generating 1,174 million euro and the Spanish broadcastor generating 312 million euro. All of this for an MVIC value of 3,200 million euro.  If the towers are valued at 10x EBITDA, the implied value of the remainder is 2.8x EBITDA and 1.8x FCF with very little leverage.  Also, Tweedy, Browne and IVA holds large stakes.  I have no insight into the specifics of Italian and Spanish politics and the relation to media firms.  Does anyone have any insight on these issues?  TIA.

 

Packer

 

 

 

 

 

The big issue is pocket risk because the company is controlled by Burlusconi who is a mafia crony with lots of baggage including accounting fraud.

[LongTerm]

Also remember that Mediaset's TV business is based on Berlusconi's ability to retain an oligopolistic hold over the Italian television market through his political muscle. It is not clear that the company is in any way well managed as it has little competition. Were Berlusconi to die or, more likely simply lose his political power in the coming election, I'm not sure that the company could maintain its past level of profitability. Furthermore, when Berlusconi passes from the political scene, one way or another, there may be a number of political and financial forces eager to take 'revenge' on his companies for his past 'abuses'.

[Christopher1]

Until last year the tv business in italy was effectively a duopoly, mediaset and rai (the public television) both were controlled by berlusconi becuse the government elect the bod of rai and berlusconi was the head of goverment. He 'disrutped' rai in order to move market share to mediaset. Now things have changed, because berlusconi doesn't govern anymore. Moreover from this year the market has been opened through the passage from analogic to digital tv with a lot of new players entering the tv business. With regard to pay per view tv sky of murdoch is by far the main palyer and mediaset is second by far.

Best