Thursday November 19, 10:02 PM

Mediaset boosts offer as News Corp fight goes on

MONTE CARLO (Reuters) - Italian broadcaster Mediaset SpA forecast double-digit growth in pay-TV clients and boosted its product offering in a new move against rival News Corp unit Sky Italia.

Vice Chairman Piersilvio Berlusconi said the company would launch video-on-demand and two new cinema channels which he said would drive growth of its pay-TV business in 2010.

"Despite the crisis we have continued to invest," he told a news conference on Wednesday. His remarks were embargoed until Thursday.

Berlusconi said pay-TV clients with prepaid or subscription cards would rise 12.5 percent to 4.5 million in 2010 from the 4 million Mediaset expects to reach by the end of the year or slightly after. As of Tuesday pay-TV clients were at 3.4 million.

Mediaset has invested about 2 billion euros ($2.99 billion) in digital technologies and pay-TV, clashing with Sky Italia, as its seeks stable income in the downturn. Mediaset has the biggest share of Italy's TV advertising market.

Mediaset is preparing for 2012 when the analog signal will be switched off throughout Italy. This month Rome went digital.

In the nine months to September revenues at Mediaset pay-TV operations soared 40 percent, while advertising sales were down 10 percent.

BREAKEVEN IN PAY-TV EBIT TARGETED

Berlusconi, son of Italian Prime Minister Silvio Berlusconi who controls Mediaset, confirmed a target for its pay-TV business reaching EBIT breakeven in 2010 but said he hoped for a slight profit.

He also said core pay-TV revenues, which comprise prepaid and subscription cards, would rise 60 percent in 2009, with total revenues topping 550 million euros.

In its latest move against Mediaset, News Corp said it was launching a free digital channel. The channel called Cielo will broadcast on frequencies controlled by publisher Gruppo Editoriale L'Espresso Spa.

A media analyst at a Milan bank called the face-off between Mediaset and News Corp "a nice war."

"What is happening shows competition is positive," the analyst said. "Mediaset might have not invested in digital three years ago if it didn't see that Sky was building a very strong position on the satellite not tied to the advertising cycle."

Moreover the battle for the TV market has often gone to court.

Sky Italia is the No. 1 in Italy's pay-TV market with a high-end offer. Studies show that Sky's revenues have topped those of state broadcaster RAI and Mediaset, which however still dominate in terms of audience with their free-to-air channels.

(Reporting by Danilo Masoni; Editing by David Cowell)

($1=.6680 Euro)