MEDIOLANUM ON THE ROAD TO FALL, MONDADORI MEDIASET SUFFERING AND COMPETITION
to play the Berlusconi government, but also for its holdings of the age 'Gold is over. The worst are the premier company of their master. With debts of the Newspaper and Mediaset. And the purchase of
Ibrahimovic is widely believed that the economic and financial situation of the Fininvest group was critical in the early 90s, while the current one is thriving.
The examination of financial statements, transactions on financial markets, the strengths of of its competitors and the risks to companies in the group shows a different reality.
In the early 90's Fininvest group was heavily in debt: in the 1993 consolidated financial debts amount to about 4,500 billion lire and the trade exceeded 2.2 trillion, but operating companies were in a favorable situation in the markets reference. The risks facing the group related to the conduct of directors objectionable from a criminal, but unlikely to impact on operating companies. The ownership structure, although opaque and inappropriate technology, enables maximum flexibility of management.
The three main group companies (Mediaset, Mondadori, Mediolanum) expressed a high potential for income because they were operating in growth markets in a position of advantage over competitors. In particular, Mediaset was in a duopoly with RAI, but had an organizational structure more agile, more flexible management and was subject to fewer regulatory constraints, the share of the Mondadori in the market for books and periodicals and was the major press did not suffer competition from other media, the business model of Mediolanum, which focuses on the network of financial advisors instead of fixed points of a pattern represented the most aggressive and flexible but less expensive than competitors, in addition the security market private asset management was in a phase of expansion.
The strengths of the operating companies allowed the financial restructuring of the group through the opening in the ownership market.
Restructuring 1994-1996
In the three years 1994-1996 the band released a series of extraordinary capital markets to reduce exposure to the banking system. Overall it was collected a sum equal to the entire debt.
In June 1994 she was placed in the bag more than half of the capital of Mondadori with a net proceeds of 800 billion (990 billion of that was gross), and the price of IPO shares was 15,000 lire (about 7.8 €).
In July 1995 he was made a capital increase reserved for private investors Mediaset (Kirsh, Rupert, Al Waaled) against the contribution of 1,200 billion lire, the new partners acquired 15% stake (6.8 trillion on value attributed to the company, prior to the recapitalization). In the months following the main creditor banks to convert some credit exposure in Fininvest Mediaset shares held by the parent (5.2%).
In May of 1996 the stock was placed in 23.4% of Mediolanum, a company jointly controlled by Fininvest and Doris Group. The income of 384 billion total was divided between the companies (100 billion as capital increase) and the shareholders (the collection of Fininvest was about 100 billion because Doris sold a higher proportion of shares). The placement price was of 12,000 lire (about 6.2 €).
In June of 1996 was an IPO of about 270 million shares in Mediaset to the price of 7,000 lire (about 3.6 €) with an inflow of about 1,900 billion lire. Outside the regulated markets, the Euromarket chain was sold to a French group of large retailers. At the end of 1996, the group Fininvest had cleared the debt, budgeted huge capital gains and retained control of Mediaset, with about 50% of the capital, Mondadori, with nearly 50% of the capital, Mediolanum, a pact signed union with Ennio Doris (together retained 76% of capital), and the soccer team AC Milan, with all of the shares.
The Ordinary 1997 - 2005
No longer burdened by excessive debt levels in the years following the operating companies produced satisfactory results which have been massively distributed to shareholders. In turn, the holding company Fininvest has consistently distributed to numerous corporate shareholders (those with the same prefix and suffix Italian holding a number between 1 and 24) most of the profits.
The share price grew dramatically, even in relation to the general stock market: in 2000 the action came to the listing of 52,000 Mediaset lire (about 27 €).
also due to the substantial distributions of profits at the end of 2004, the parent company had a net debt of € 864 million. In April 2005, Fininvest held to be placed with private investors of 16.68% stake in Mediaset a price per share of € 10.55, with an income of more than € 2 billion. At the end of the parent company had funds available for about 760 million. A portion of the shares sold and was subsequently re-acquired in this period, the controlling stake is 39%.
The decline of five-year period 2005 -2010
In recent years the trend of stock of companies in the Fininvest group was not favorable. In the last four years, the value of Mediaset shares has more than halved. In March 2009 the stock has reached a minimum of 3.1 euro per share, a price 20% lower than the placement of 1996. The Mondadori shares have lost more than 70% of their value last three years. The decrease in securities Mediolanum was above 60% in four years. In March 2009 the share reached a minimum price of 2.2 €.
At current share prices, the total securities marketed by Fininvest express a value far below that of placement. Between 1994 and 2010 the capitalization of the Mondadori has fallen by more than 40%. With reference to the last placement Mediaset securities, the decline in value was 1.1 billion euro.
According to data published on the consolidated Fininvest, the Group's financial performance in the biennium 2007-2009 was not particularly favorable. In particular, turnover fell from 6.2000000000 to 5.4000000000 euro; profit fell from 366 to 174 million (in the second half of 2008 the Group closed the deal with a loss of more than 30 million); Net debt, excluding the Milan whose accounts are not consolidated line by line, has doubled from 597 to 1175 million, the equity has fallen by 365 million, investments declined by 28.5% 1.4 billion. Downsizing the group has included the team of staff, which declined to 3,300 units and 15.5%. A considerable part of restructuring charges weighed on the budget. The data do not provide consolidated account, however, fiscal policy, the risks and weaknesses of the companies that make up the group. Payment
frozen at De Benedetti
With criminal sentence has become final, it was found that in 1991 the dispute with the De Benedetti Group for the acquisition of Mondadori was solved with the corruption of judges called upon to settle the dispute. In civil proceedings, the Court of First Instance ruled with decision immediately enforceable in the amount of € 750 million from Cir relief to repay the damages. An agreement between the parties approved by the Court allowed the Fininvest to freeze payment until the conclusion of the appeal in exchange for a bank guarantee for the full amount. In the present proceedings, the formation of the Court has appointed a trio of university professors of economics (Guatri, Martellini and Pellicelli) to draw up technical expertise to determine whether the amount of damages is correct. Although more than likely, barring unforeseen circumstances, the Fininvest should pay the sum Cir some refreshment at the damage, the directors have not written any provision in the budget, based only on opinions of a party. This is not a choice certainly prudent that makes it less transparent and that the consolidated financial statements of a parent.
Debts
Mediaset Mediaset Group is the main source of income and liquidity of the Fininvest: in the period 2004-2209 has paid 2.5 billion to shareholders in dividends (approximately 90% of profit), including almost to a parent. At the same time the financial position, however, have deteriorated: the debt has risen by more than 1.6 billion and shareholders' equity of the group fell more than 530 million euro. In this decline has contributed to the repurchase of treasury shares for 417 million euro to a value higher than most recent scholarship about 200 million, without the loss is through the income statement.
also reports that measure the effectiveness of budget management have deteriorated: in 2004 the group had invested less than eighty-nine cents for every euro of turnover, invested capital in 2009 exceeded revenues by more than 5%. The budget, traditionally cryptic description of the investment, does not provide useful information to explain the reason for the increase of investment in relation to turnover. In particular, investments in television and film rights have reached 2.6 billion, a figure that would require a greater level of detail. In goodwill, as well as investment in Telecinco (363 million) what is included for the purchase of a limited liability company TaoDue 116 million.
During the current year, Telecinco has carried out a strategic importance: the company has merged with the English television station Cuatro group Prisa and bought a share of 22.5% of Pay TV for Iberian figure close to 500 million euro. This transaction strengthens the competitive position of the Iberian Market Mediaset but further weakens the financial structure of the group.
The previous operations of strategic significance have not yet yielded results to the group. The purchase of 33% of the production house Endemol television formats has cost more than 220 million only in the last two years, in 2009 the budget of that company closed with a loss of 338 million (despite extraordinary gains of more than 81 million made during the restructuring of debt) and with turnover falling by almost 9% over the previous year, according to the Daily Beast website, the company would be in a severe liquidity crisis and the other members would be working on a massive financial restructuring. Despite the progress
commercial activity on the digital terrestrial remains at a loss. The European Court of Justice has condemned the Italian state Mediaset to pay about 220 million of aid received improperly to favor the spread between the public the decoder. The frequent non-payment of expired prepaid cards is an economic risk and reputation.
The biggest weakness of the Mediaset group concerns the competitive position in the market for at least three factors. The growing competition from Pay TV offering better-quality programs, even in journalism. The spread of the Internet as alternative media for the enjoyment of entertainment. Opening the market to other private channels allowed by the transition to digital technology in television broadcasting. Improper conduct of the weakening of the main competitor, Rai, favoring the maintenance of a satisfactory operational profitability in the short term but it is a perspective with an action potential limited.
Mondadori and public money
For several years, the Mondadori Group pursues policies drawing massive downsizing of public contributions to reduce the staff team. The drastic containment of operating costs has helped maintain the company's profitability to be just positive, the presence of a downward trend in revenues.
The situation is much more negative with regard to payment of compensation. With a consolidated net assets of approximately EUR 550 million, intangible assets are recognized for almost one billion euro, relative to items that have gradually lost their value. The net tangible assets group is negative for more than 400 million euro. Consob, which would oversee the financial statements of listed companies, has not yet announced to the market any information.
Another point of concern for the supervisory board about the participation of minority (nearly 40%) of the European company that publishes editions of the newspaper, whose majority owner is Paolo Berlusconi. For many years, the company permanently closed the budget with a substantial loss for the year (64 million euro in the last three years), constantly shelves for the portion attributable to the minority shareholder. The chronic deficit is a strong indication that the publication of the magazine is not a venture financial gain and for members of minority constitutes only a cost item. Since the Consob should protect the economic interests of the minority shareholders of listed companies, it would be interesting to know if it has been informed of the ratings given by the directors of the Mondadori business plan under which they have repeatedly agreed to cover losses of an initiative that has proved bankruptcy.
Regarding the risks, it should be recalled that in the first half of the company closed a dispute with the tax authorities of the State which claimed the unpaid taxes for 173 million euro, plus penalties and interest paid to the tax only 5% of this amount (8.6 million). This operation was carried out following the adoption of ad hoc norms on the part of Parliament. The payment was made on the balance sheet as deferred tax assets and has no impact on the income statement. The Supreme Court has, however, appealed to the European Court of Justice claiming that the law would be contrary to international treaties in the event the claim is accepted, the Mondadori publishing house will be called upon to pay the full amount of tax (350 million € ), plus interest and penalties. In any case, has suffered the reputation of the publisher.
Mediolanum Mediolanum
risk insured is a "financial conglomerate with a majority insurance industry," whose activities extend from the private individual insurance, life insurance, asset management and banking.
The growth rates were fast and with them increased leverage: the activities included in the consolidated balance sheet of 2009 amounted to € 28.9 billion while shareholders' equity stood at 990 million, 3.4% of investments .
The quality of the assets affected by more than 170 billion of intangible assets related mainly to goodwill during the purchase of some small foreign financial companies (mostly English). Mediolanum then holds 3.45% stake in Mediobanca bought at a higher price of around 100 million to current share prices.
Although the main activity is that insurance risks are largely borne by the policyholders: the risk by about 70% of the securities in the portfolio is borne by the customer. Commission income is high (over 515 million euro in 2009, including proceeds from the asset management) and a significant portion relates to performance fees (over 150 million euro).
The company remains in charge of operational risk management of a typical network of financial and credit risks relating to financing transactions entered into through the branch banking conglomerate. They tend to emerge during crises in financial markets, like the present.
The business model of Mediolanum is characterized therefore by the lack of financial risk-taking with the establishment of high management fees and the sharing of profits in the event of a favorable trend in the prices of securities. In the medium term will not be easy to maintain a good reputation in the event of adverse market developments. Financial disaster
of Milan since 1987 and until the first half of this decade most of the seasons of Milan have been exciting. There was one case: for almost twenty years the company has acquired the best players on the market (the first: Gullit and Van Basten) blind to the purchase of tags and of engagement. The victory on the revenue growth and reduced the financial requirements.
In terms of economic and financial Milan have changed the way we manage football clubs in Europe, shifting the emphasis from the balance of the accounts in relation to sports results and advertising for the property. The deployment in Europe of such a management model has led to the explosion of the costs of football clubs, many of which are in precarious financial situations of strong.
The parable of Milan has been completed. For some years in the field, in major competitions, victories are a thing. On the financial situation is disastrous.
According to the consolidated financial statements of Milan group on the 2006-2008 period, the latest published on the website of the club, it shows the following main data: while revenues fell from 305 to 238 million euro, the costs have risen from 257 to 311 million and the result of 'operating result fell from a profit of EUR 12 million to a loss of 67 million, while shareholders' equity, consistently negative, increased from -41 million to -65 million euro, the debt rose from 284 to 364 million euro. The property could not bring back the negative equity in 2005 because it was separated into a wholly owned subsidiary of intangible assets relating to temporary commercial exploitation of the mark, as assessed in the report 184 million €. Although, in December of 2008, the rose of the players was mainly made up of athletes at the end of his career (with the exception of Kaka, Pato and Borriello) the net worth of cards stood at 88 million €, also were high for the commitments payment of salary. News agencies it was learned that the 2009 budget ended with a loss of about 10 million, thanks to the exceptional gain realized on the sale of Kaka to Real Madrid. The outlook for the current year are unfavorable, since the market has been completed and blatant sales with purchases of Robinho Ibrahimovic.
weaker and more competition
Seventeen years after the first financial crisis, the Fininvest group is likely to be in just a few months with a turnover equal to or less at the time, a higher debt and lower profitability. Mondadori needs a robust increase in capital at least to restore the balance of assets in real values, Milan has to take back the losses of recent years and restore the property, the parent will be required to compensate the CIR and could fall into a liquidity crisis.
But it is especially at the strategic level that the greatest difficulties arise: in the early 90, the operating companies expressed strong competitive advantages in expanding markets, now find themselves facing an increasingly fierce competition from an inherent position of weakness. The nonlinear structure of ownership, simplified, partially in the last two decades, could be vulnerable for another reason.
FROM "THE MANIFESTO"
