Vivendi, Mediaset clinch deal in challenge to Netflix

Milan (AFP) - Vivendi will acquire Mediaset's pay TV arm and take a stake in the Italian broadcaster as part of French tycoon Vincent Bollore's plan to build a European media giant to rival US streaming powerhouse Netflix.

The partnership will see the companies swap 3.5 percent stakes in a "strategic alliance" aimed at "capturing new opportunities across the international competitive landscape," Mediaset said in a statement Friday.

France's Vivendi will take complete ownership of Mediaset Premium, the Italian company's loss-making pay TV arm, acquiring Mediaset's 89 percent stake and the 11 percent held by Spain's Telefonica.

Mediaset Premium, which has the right to broadcast Champions League football matches until 2018, had 2.01 million subscribers in late December, against 1.7 million six months earlier.

By comparison, competitor Sky Italia has 4.7 million.

Vivendi, which already owns leading French pay TV channel Canal+ and Universal Music Group, said in a statement the move "greatly expands its presence in European pay-television" and increases its global individual subscriber base to more than 13 million.

"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," it said.

Mediaset, whose shares climbed 5.4 percent Friday pending the agreement, said the project with Vivendi would allow the emergence of a new major content player.

"The agreement will foster the creation and distribution of new international contents by leveraging on the production strengths and cultural affinities of Italy, Spain and France," it said.

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The deal ends months of speculation over a tie-up between Vivendi and Italy's biggest commercial broadcaster, controlled by former prime minister, billionaire Silvio Berlusconi.

Mediaset said the aim was to create "the first pan-European on-demand streaming content platform," bringing together the online properties of the two groups in Italy, France, Spain and Germany to offer a wide ranger of films and TV series.

"The aim of the new platform will also be to distribute dedicated original productions. The new project also forecasts expansion in countries where the two companies are not currently present," it said.

Vivendi is also the main shareholder of Italy's Telecom Italia, with a 24.9 percent stake.

"We believe in integration between telecom and broadcasting firms," Vivendi CEO Arnaud de Puyfontaine said recently.

The Italian operator is now headed by Flavio Cattaneo, following the resignation in March of Marco Patuano who had strategic differences with the French group.

Citing the agreement with Mediaset, de Puyfontaine Friday stressed that "this investment demonstrated once again our commitment and our close ties with Italy: the confirmation of our strategy to create a pan-European leader in media and content production."

Mediaset vice president Pier Silvio Berlusconi told journalists the deal did not mean the Berlusconi family was on its way out of the media sector: "on the contrary, I can say with great conviction we want to invest and develop. This is a first step towards opening up to Europe".

By snapping up Mediaset Premium, Vivendi is expanding a global pay TV network already established in France, Poland, Africa, Central America and the Far East, the company said.

According to Italian press reports, the French group also has it sights on Italian production company Cattleya, which has turned out the hit crime thriller television series "Romanzo Criminale" and "Gomorrah".

Would-be media giants are faced with a rapidly evolving scene with global video contents on the up, the emergence of international OTT players ("over-the-top content", the delivery of media directly over the Internet) and the increasingly transnational structure of pay TV players.

News of the deal followed Vivendi's announcement this week that it is launching Studio Plus, a production label dedicated to international series in multiple languages for mobile screens, from smartphones to tablets.