Fininvest purchase hits profits

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Andrew Feinberg

White House Correspondent

FININVEST, the Italian media and property group that pulled out of the bidding for the new Channel 5 television network, has shown the scars of its battle for control of the Italian publishing group Mondadori with a sharp drop in its annual income, writes Jason Nisse.

The group, which is headed by Silvio Berlusconi, saw its net profits last year fall to L61.3bn ( pounds 28.3m) from L191bn despite a 10.1 per cent rise in operating profits to L544bn.

The group said the fall was due to costs linked to the purchase of Mondadori, where Fininvest bought part of the operations in a deal that ended the two-year battle with Carlo de Benedetti, chief of Olivetti. The assets that went to Mr de Benedetti include La Repubblica, which has a shareholding in Newspaper Publishing, owner of the Independent and Independent on Sunday.

One senior Fininvest executive recently said the Mondadori assets had cost three times as much as they were worth.

The purchase pushed Fininvest's debts up by a fifth to L2,900bn and Italian analysts are concerned that the large debt burden may restrict Mr Berlusconi's ambitions in European media.

Earlier this year Fininvest decided against joining a rescue for the fifth French TV channel, Le Cinq. It withdrew from the running in Channel 5, for which ultimately only one bidder was left, Thames TV's FiveTV, which bid just pounds 1,000 for the licence. There are unconfirmed rumours in the industry that Fininvest may return to the fray as an investor in FiveTV.