MediaForEurope (MFE) (MFEB.MI) is set to take control of ProSiebenSat.1 (PSMGn.DE) after Czech investment group PPF on Wednesday said it would sell its stake in the German broadcaster to the TV group controlled by Italy's Berlusconi family.
PPF's move effectively hand MFE the driving seat at ProSieben, making easier for the broadcaster run by Pier Silvio Berlusconi, the son late former Italian Prime Minister Silvio Berlusconi, to pursue a combination of the businesses.
MFE, which runs Mediaset TV operations in Italy and Spain, has launched a 1.8 billion euro cash-and-share bid for the German peer in a push to create an ad-funded European TV champion after it had accumulated a large stake in the company.
PPF said it would tender its 15.68% holding into MFE's offer and unwind its remaining financial instruments, ending its investment in ProSiebenSat.1 after attracting few takers for its own share purchase offer for an up to 29.99% stake.
"MFE's shareholding is very likely sufficient to secure a simple majority at every ProSiebenSat.1 shareholder meeting," PPF said, explaining its decision.
"At the same time, PPF’s limited acceptance makes it impossible for PPF to continue its original role as a strategic investor," the Czech group added.
ProSiebenSat.1 declined to comment.
The offer is still ongoing and official results will be published on Sept. 4.
EUROPEAN EXPANSION
MFE, which dominates the 4.6 billion euro Italian TV advertising market, sees European expansion as vital to withstand U.S. streaming giants such as Netflix (NFLX.O) and YouTube (GOOGL.O), which are grabbing advertising spending and viewers.
The Milan-listed company forecast a full combination between the two businesses would ultimately add up to 419 million euros in annual operating profit within four years.
Part of the upside would come from a combined advertising platform aimed at global brands seeking cross-border campaigns, leveraging what would become one of Europe's largest TV networks by revenue alongside RTL (AUDK.LU) and Sky.
Based in Bavaria and operating also in German-speaking Austria and Switzerland, ProSieben lacked a core shareholder until MFE began its stake building in 2019.
It struggled to craft a standalone strategy, following a failed push into tech, including ventures like online dating, and had come under pressure due to falling advertising revenue in recent years, partly because of Germany's economic downturn.
In a battle to catch up with U.S. heavyweights, European broadcaster RTL (AUDK.LU), which holds large TV operations in Germany, in June announced an agreement to buy the local unit of pay-TV group Sky (CMCSA.O).
Elsewhere in Europe, broadcasters have clinched deals to distribute their content on U.S. streaming platforms, with major French broadcaster TF1 (TFFP.PA) joining forces with Netflix.
"In a landscape increasingly shaped by consolidation pressures and the challenges of digital transformation, ProSieben failed to present a credible alternative," said François Godard, analyst at research firm Enders Analysis.
"MFE’s strategy may be challenging to implement, but it marks a step forward," said Godard, adding that developing a unified streaming platform will be crucial to capturing audiences shifting away from linear TV.
