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Shares in Mediaset, the Italian broadcaster controlled by former premier Silvio Berlusconi, fell more than 5 per cent on Friday as analysts questioned its credibility in the wake of a profit warning related to its accounting policies.
Mediaset said late on Thursday that advertising sales in its Publitalia unit would be €2.8bn ($3.7bn) in 2006, a fall of 3.6 per cent on the previous year.
The company previously warned that advertising revenues would be flat in 2006 following the loss of sports coverage.
Group net income would be €505m in 2006, the company said, between 12 per cent and 15 per cent lower than most analysts had forecast. The dividend would be held flat at €0.43 per share.
Mediaset attributed the revenue shortfall “to a different revenue recognition on a limited portion of the 2006 advertising turnover”.
Netting off customer discounts, €90m of the misallocated revenue would be recognised in the 2007 accounts.
Several analysts voiced concern that the company appeared to have recognised the entire revenue for 15-month contracts signed in October within the 2006 financial year. Julien Roch, analyst at Merrill Lynch, said it amounted to a “massive profit warning”.
Mediaset rejected suggestions that its credibility had suffered. “I know the market is uneasy right now,” Giuliano Adreani, the chief executive told Class CNBC. “The board of directors used very prudent [accounting] criteria for these revenues in the 2007 report.”
Analysts said the new guidance meant Publitalia’s advertising revenues had fallen 10 per cent during the fourth quarter, while group costs had been higher than earlier forecast.
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