Lower taxes boost Mediaset profits

Italo broadcaster's 1st half net earnings up 2.7&

By MICHAEL DAY

MILAN -- Italian Prime Minister Silvio Berlusconi's Mediaset broadcast group posted better than expected first-half net profits Thursday, largely due to lower tax rates in Italy and Spain, where it controls Telecinco.

The 2.7% rise to e350 million ($545.7 million), helped by some non-recurring net income, came in ahead of analysts' average prediction of around $491 million. Operating profit, however, fell from $1.09 billion to just over $1 billion despite a 9.4% rise in consolidated net revenues to $3.5 billion.

Mediaset said that 2008 full-year net profit could beat last year's if advertising revenues in the second half in Italy and Spain mirrored the first half increase of 2.2 % Not all analysts are confident that ad revenues will stay strong, however. Last month, Nielsen Media Research cut its growth forecast on Italian ad spending for this year, citing the weak Italian economy.

And fears of soft ad revenues have preyed on Mediaset's share price of late -- hastening the group's attempts to diversify into program-making.