Mediaset Content Deal Shows Broadcasters Can Charge for Free TV

(Bloomberg) -- Mediaset SpA is finding new ways to make money from a free-to-air television business that’s long been seen at risk from streaming services.

The Milan-based broadcaster founded by former Prime Minister Silvio Berlusconi reached a deal with Telecom Italia SpA to provide the phone carrier’s video-streaming unit with content viewers can otherwise access simply by turning on their television sets. The three-year deal will generate 50 million euros ($59 million) of fees for Mediaset, according to people familiar with the matter, who asked not to be identified as the terms are private.

Representatives for Telecom Italia and Mediaset declined to comment.

The win shows that the comedy shows and soap operas produced by traditional broadcasters are still coveted by viewers in an era where digital giants like Netflix Inc. and Inc. are spending billions on original content for their subscription-based streaming platforms. It also follows efforts by Mediaset to rebound after the painful collapse of its pay-TV deal with French billionaire Vincent Bollore’s Vivendi SA, which pulled out of a 2016 agreement to buy Mediaset Premium for about 800 million euros.

Mediaset is among free-to-air broadcasters starting to find new revenue streams as viewers abandon set-top boxes for smartphones, by seeking to charge so-called retransmission fees to pay-TV providers showing their content on digital platforms. In the U.K., ITV Plc has been pushing for such charges in discussions with Liberty Global Plc’s Virgin Media.

From Telecom Italia’s perspective, it’s an opportunity to rejig its digital TV platform and offer free-to-air content as an on-demand service.

Italy’s biggest commercial broadcaster is also showing it can recover in its pay-TV business from the deal gone bad with Vivendi, even with the two still locked in a legal battle. Mediaset and Sky Plc’s Italian unit in March announced a content and distribution deal that opened the way to collaboration between the two media groups.

©2018 Bloomberg L.P.