Mediaset to revamp its pay TV strategy

Mediaset is to rethink its pay TV strategy, making its pay TV channels and content available to other operators and opening up its domestic digital-terrestrial pay TV platform to all third-party content players interested in a “quality pay” proposition.

The Italian media group also said it intended to launch a next-generation advertising-supported video-on-demand platform in October and to create a raft of online-first content through partnerships such as the recent international multichannel network initiative around Studio71.

According to the company, which is presenting its strategy to investors in London today, these moves, together with an expansion of the activities of Mediaset España, will help Mediaset grow its share of the advertising market from 37.4% today to over 39% in 2020 and will help deliver EBIT of €468 million.

The change in pay TV strategy follows the collapse of Mediaset’s deal with Vivendi last year and the ongoing feud between the two that has led to a protracted legal battle and most recently has seen Vivendi mount an unsolicited move to acquire close to 30% of the Italian company’s shares.

In its presentation notes, Mediaset said it would “test the value of a unique distribution platform able to offer a turnkey solution open to all third parties interested in an installed base of four million cards and six million devices”.

Mediaset expects significant upside from its new strategy, with the 2020 EBIT target representing a huge lift from the €26.8 million reported for 2015.

Mediaset said that its advertising revenues for 2016 were up 4% compared with the previous year, or up 2.8% on a like-for-like basis.

The new advertising platform to be unveiled in October will, according to the company, give AVOD a similar level of functionality as currently available on the Infinity SVOD platform.

By way of background, Mediaset’s aborted deal with Vivendi would have seen the latter take 100% control of Mediaset Premium, the broadcaster’s pay TV platform. This would not have included Mediaset’s premium movie channels, broadcast on the platform, which would have been retained by Mediaset under the proposed deal. Mediaset now appears to be proposing to offer these channels, and possibly other content, to third-party pay TV providers while opening up its own platform to other content providers, thus moving away from a strategy purely based on building up Mediaset Premium’s own base with a raft of exclusive content.

In its presentation, the broadcaster said it would “exploit existing [movies and series] deals on all platforms, particularly OTT”.

Regarding premium football rights – the key content for the premium platform – Mediaset said that “a new structure” would be set up to enable Mediaset Premium to “participate in auctions” for rights with “an approach oriented towards real business opportunities” – a possible hint that the group will also look for partnerships in this area to offset the huge cost of securing exclusive rights.

In its presentation notes, Mediaset said it would “remain a non-sport channel publisher with a multi-platform distribution” and would “adopt an opportunistic approach to football rights”. Critically, it said its goal would be to achieve a “sustainable business irrespective of the football auctions’ outcome”, referring to the forthcoming round of auctions for Champions League and Serie A rights.