-- Mediaset fist-quarter net profit tumbles as advertising decline continues
-- Mediaset doesn't see an improvement in the advertising trend in April, May
-- The Italian broadcaster faces increasing competition in the pay-TV business
(Updates to add details, executive comments, in fifth and last two paragraphs)
By Giada Zampano
Of DOW JONES NEWSWIRES
ROME -(Dow Jones)- Mediaset SpA (MS.MI), Italy's largest private broadcaster, Tuesday confirmed its forecasts for declining profits for 2012 after posting a sharp drop in its first-quarter net profit due to a continued fall in advertising revenue in its key Italian and Spanish markets.
The broadcaster, owned by the family of former Prime Minister Silvio Berlusconi, said it expects this year's consolidated net profit and cash generation to be lower than last year's unless market conditions improve.
For the first three months of the year, the group posted a net profit of EUR10.3 million from EUR68.4 million in the same period a year earlier. Analysts had forecast a net profit of EUR23.3 million.
Revenue fell to EUR977.8 million from EUR1.1 billion as gross advertising spending declined by 10% in Italy.
Mediaset executives said in a conference call with analysts they don't expect the advertising trend to improve in April and May.
Mediaset is battling with News Corp.'s (NWS) satellite unit Sky Italia in the fast-growing Italian pay-television market, as it struggles to defend its dominant position in the free-to-air TV sector.
The broadcaster is facing a shrinking audience for its free-to-air channels, as well as dwindling advertising revenue in a stagnant economy.
The pay-TV business also registered a weak performance in the first quarter, with revenue falling by around 3% to EUR131.1 million.
The Italian broadcaster is pursuing a three-year cost-cutting plan, which will reach savings of EUR250 million a year in 2014.
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-By Giada Zampano, Dow Jones Newswires; +39 06 69766920; email@example.com
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(END) Dow Jones Newswires
May 08, 2012 14:03 ET (18:03 GMT)
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