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MFE already secured 44% stake in takeover bid

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PPF decision make easier for MFE to pursue combination

with

ProSieben

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European broadcasters looking to consolidate to resist

U.S.

streaming dominance

(Adds details, background and analyst comment from par 3)

By Elvira Pollina and Jan Lopatka

PRAGUE/MILAN, Aug 27 (Reuters) - MediaForEurope (MFE)

is set to take control of ProSiebenSat.1

after Czech investment group PPF on Wednesday said it would sell

its stake in the German broadcaster to the TV group controlled

by Italy's Berlusconi family.

PPF's move effectively hand MFE the driving seat at

ProSieben, making easier for the broadcaster run by Pier Silvio

Berlusconi, the son late former Italian Prime Minister Silvio

Berlusconi, to pursue a combination of the businesses.

MFE, which runs Mediaset TV operations in Italy and Spain,

has launched a 1.8 billion euro cash-and-share bid for the

German peer in a push to create an ad-funded European TV

champion after it had accumulated a large stake in the company.

PPF said it would tender its 15.68% holding into MFE's offer and

unwind its remaining financial instruments, ending its

investment in ProSiebenSat.1 after attracting few takers for its

own share purchase offer for an up to 29.99% stake.

"MFE's shareholding is very likely sufficient to secure a

simple majority at every ProSiebenSat.1 shareholder meeting,"

PPF said, explaining its decision.

"At the same time, PPF's limited acceptance makes it

impossible for PPF to continue its original role as a strategic

investor," the Czech group added.

ProSiebenSat.1 declined to comment.

MFE secured a 43.6% stake through its takeover bid earlier this

month after raising its initial bid and obtaining the ProSieben

board's recommendation for shareholders to accept the offer.

The offer is still ongoing and official results will be

published on Sept. 4.

EUROPEAN EXPANSION

MFE, which dominates the 4.6 billion euro Italian TV

advertising market, sees European expansion as vital to

withstand U.S. streaming giants such as Netflix ( NFLX ) and

YouTube, which are grabbing advertising spending and

viewers.

The Milan-listed company forecast a full combination

between the two businesses would ultimately add up to 419

million euros in annual operating profit within four years.

Part of the upside would come from a combined advertising

platform aimed at global brands seeking cross-border campaigns,

leveraging what would become one of Europe's largest TV networks

by revenue alongside RTL and Sky.

Based in Bavaria and operating also in German-speaking

Austria and Switzerland, ProSieben lacked a core shareholder

until MFE began its stake building in 2019.

It struggled to craft a standalone strategy, following a

failed push into tech, including ventures like online dating,

and had come under pressure due to falling advertising revenue

in recent years, partly because of Germany's economic downturn.

In a battle to catch up with U.S. heavyweights, European

broadcaster RTL, which holds large TV operations in

Germany, in June announced an agreement to buy the local unit of

pay-TV group Sky.

Elsewhere in Europe, broadcasters have clinched deals to

distribute their content on U.S. streaming platforms, with major

French broadcaster TF1 joining forces with Netflix ( NFLX ).

"In a landscape increasingly shaped by consolidation

pressures and the challenges of digital transformation,

ProSieben failed to present a credible alternative," said

François Godard, analyst at research firm Enders Analysis.

"MFE's strategy may be challenging to implement, but it

marks a step forward," said Godard, adding that developing a

unified streaming platform will be crucial to capturing

audiences shifting away from linear TV.