French media giant Vivendi is looking to change the terms of its deal with Mediaset over the Italian company’s pay TV unit. Vivendi confirmed that it is no longer looking to take control of 100% of Mediaset’s loss-making pay TV unit, earning the chagrin of Mediaset execs, who have fired back and accused Vivendi of breaking a signed agreement.
Back in April, when news of the deal closing was announced, the Vivendi-Mediaset alliance was being heralded as a game-changer for the media biz in Europe. The deal was supposed to set the way for Vivendi to push forward with plans to create a pan-Euro free-to-air, pay TV and over-the-top platform that can compete with everyone from Netflix to Sky and other competitors. The original deal envisaged the two companies swapping 3.5% of each other’s stock, with Vivendi also acquiring control over Mediaset Premium, in which Mediaset owned 89%. Vivendi was also set to take over the remaining 11% owned by Spain’s Telefonica. “The agreement with Mediaset confirms Vivendi’s intention to build strong positions in Southern Europe, a market that shares a similar Latin culture and roots,” Vivendi said in a statement at the time.
Now, however, Vivendi – according to irate Mediaset execs- has proposed to acquire only 20% of the pay-TV unit, plus 15% of Mediaset itself in three years. That shift was blasted by execs at Mediaset, still controlled by the Berlusconi family, as a stealth attempt to take over Mediaset. Vivendi execs countered by saying due diligence carried out by the French company had discovered “significant differences in the analysis” of Mediaset Premium’s financials, as outlined in a June 21 letter sent from Vivendi to Mediaset, which also expressed its doubts the unit would break even in 2017-2018.
Vivendi execs argue that the new proposal is value-wise equivalent to that agreed in April. Mediaset execs, however, see the new proposal diluting the stake of Fininvest SPA, the Berlusconi family’s holding company, in Mediaset from 34% to 30%. A Fininvest statement accused Vivendi, and its billionaire chairman Vincent Bollore, of attempting to amass “an extremely large stake in Mediaset in an underhanded and unacceptable way,” a charge that Vivendi chief exec Arnaud du Puyfontaine has rejected, saying the two companies still have amicable ties and remain strategic partners. To the contrary, he told reporters, “we’ve proposed an even more ambitious relationship.”
It remains unclear, even unlikely, if Mediaset shareholders will accept the new terms on offer.