Vivendi-Mediaset tie-up to fuel European deals
Vincent Bolloré’s deal to take a stake in the TV group of Italian media mogul and former prime minister Silvio Berlusconi will cause a wave of consolidation in the European media industry and pit the French corporate raider against Rupert Murdoch, say media executives, bankers and analysts.
The Vivendi media group in which Mr Bolloré is the main shareholder agreed on Friday to take a 3.5 per cent stake in Mediaset, Italy’s largest private broadcaster owned by Mr Berlusconi, as well as taking full control of Mediaset’s pay-TV business.
The deal, which was drawn up in the past two months, according to insiders, creates a southern European media group covering France, Italy and Spain and is billed as a powerhouse able to take on increasing pressure from US such as Netflix. It also boosts Mr Bollore’s presence in Italy where Vivendi is the biggest shareholder in Telecom Italia.
But in buying Mediaset’s pay-TV business the agreement also ratchets up competition with Mr Murdoch’s Sky empire which last year united its business across the UK, Italy, Germany, Ireland and Austria under a single group, say media industry experts.
The deal should be seen as “the starting gun of a drive for consolidation of media across Europe,” said one senior industry source. Bankers on the deal and media executives also suggested Mr Bolloré could seek to snap up other assets on the back of Mediaset deal. ITV in the UK and ProSiebenSat. 1 are seen as other potential targets, they said.
Piersilvio Berlusconi, eldest son of Mr Berlusconi from his first marriage, indicated that Mediaset had opted for the Vivendi offer over one from Sky. The deal implies a value for Mediaset Premium of €735m, far greater than analyst estimates of about €500m. It also allows Mr Berlusconi to step out of the annual costly battle for pay-TV football rights which Mediaset, which has suffered from declining advertising during Italy’s long recession, could ill-afford.
“We had an offer from a satellite rival of [Mediaset] Premium, but in terms of strategic opportunity this is the much, much better option,” said Mr Berlusconi adding his father and Mr Bolloré had “a friendship going back years”. Mr Berlusconi added that the cross-shareholding with Vivendi was “forever”.
Still, a “lock up” clause in the deal banning Mr Bolloré from buying more than 5 per cent of Mediaset shares for the next three years has raised speculation the French tycoon could seek to purchase the rest of Mediaset after 2019. Italy is due to hold national elections in 2018 and people familiar with Mr Berlusconi say he would want to maintain control of his media interests, which he has adeptly used to further his political clout, until after the national vote.
“Buying Mediaset would not only give Vivendi a presence in the Italian TV advertising market but also in Spain, given Mediaset’s majority stake in Mediaset Espana,” analysts at Liberum said in a note before the deal announcement.
“I would assume this is part of a bigger game to buy Mediaset, sell Telecom Italia [to raise funds to buy Mediaset] and go after Murdoch,” said one senior media industry source.