"Let me present a plan in which we on the board of directors together with the shareholders strongly believe", Pietro Scott Iovane, CEO of RCS Media Group, proudly began this morning in front of financial analysts. At that moment, however, sales were pouring into the stock (-6,84%) an understandable reaction, given the deep red of the 2012 accounts (509 million losses, of which 3 million in the last three months) and the usual disputes that accompany the events in via Solferino: first the resignation from the board of directors of Francesco Merloni, then the letter with which Diego Della Valle expressed his perplexities on the terms of the operation and the existence of possible conflicts of interest. Others, for now, are silent but it is obvious that the conditions envisaged for the increase (reduction of the value of the old shares and issue of the new ones at 129 euro) are not such as to arouse enthusiasm, above all among those who, like Giuseppe Rotelli, risk to see its stake reduced from 0,2 to 16,3% in the event of non-subscription. Lastly, not least, the 4,4 accounts do not bode well as can be seen from the same three-year plan which, based on the forecast of a 2013% drop in GDP this year (+1% in 0,5, +2014% in 1,2), predicts an average annual decline of 2015% for traditional advertising in Italy both at market and group level. The traditional advertising market in Spain, on the other hand, is seen down by 8%, with RCS down by 4%. An average annual decline of 5% is expected in Italy in the daily circulation of newspapers, with a 10% growth in digital which will stabilize the balance. In Spain, the decline in print circulation is expected at an annual average of 38%, with digital growth of 9% and a slight overall decline expected.
In short, Iovane's mission was not easy. But, at least judging by the partial recovery of the stock in the afternoon (loss halved to a more comfortable -3,3%), Iovane deserves enough: moreover, in these conditions, he would have been a miracle, a difficult commodity for a former manager by Microsoft.
FULL BIT (AS FAR AS POSSIBLE)
To remedy the crisis in traditional activities, the RCS group "will strengthen its presence and its offer on digital" by focusing on profitability, underlined the CEO Pietro Scott Jovane: in the face of market growth of 11%, RCS aims to increase by 16% in Italy. Online advertising is expected to grow by 6% on the Spanish market, with Rcs growing by 7%. The focus on digital, he added however, "does not mean that we will abandon paper" which continues to be part of the business. "Digital trends, which are traditionally considered as threats to our market - he said -, are one of the best opportunities RCS has to expand its influence, reach new advertising markets and become more profitable". But to achieve this goal, according to Jovane, RCS must become capable of "moving rapidly" to face the crisis in the sector and transforming itself "into a new player, more agile and ready to compete in a constantly changing world". Not an easy feat for a company with complex governance and limited financial ammunition, after the disastrous campaign in Spain.
GUARANTEED 91% INCREASE…
The capital increase that will start in the summer will contribute to remedying the need for new finance. The exact terms of the operation will only be defined by the board of directors on April 28, convened to respond to Della Valle's grievances. But it is already known that, by July, 400 million will arrive (another 200 in 2015), half of which will be used to repay bank loans. In this way a banking pool will disburse another 575 million. The increase should hold no surprises, given the parachute (166 million) guaranteed by a pool of banks, mostly creditors of RCS. "Naturally we expect our partners to follow the operation," said Chief Financial Officer Riccardo Taranto. recalling that the renegotiation of the debt is subject to the execution of the recapitalisation. So far, he said, "letters for about 50%" of the expected increase of 400 million have arrived, to which should be added the approximately 166 million of the expected guarantee syndicate. In summary, "91% of the capital increase is guaranteed and we expect to reach 100%".
THE CESSIONS: FIRST DADA, THEN THE BRICK
The top management of RCS are "confident of reaching the target of 250 million" of disposals of non-core assets by the end of next year, said the financial director Riccardo Taranto. The closest deal "is connected to Dada so there may be a breakthrough between the end of the month and May". The real estate sales chapter is much more promising. The RCS building in via San Marco in Milan, the same building on via Solferino which houses the editorial offices of the Corriere and the Gazzetta, is "very attractive". "We are analyzing" the proposals "of potential investors interested in this building" added the financial director. However, the 'construction site' remains open for the sale of the ten periodicals that the group intends to sell or alternatively close. The board of directors of the company yesterday deemed the two offers on the table inadequate, above all due to the size of the 'financial dowry' requested by the buyers: we are talking about a figure of over 20 million.
