Vivendi/Mediaset: tycoons’ TV tussle cost them too much time
The moral of the tale is that, when business imitates popular culture, investors lose out
The fight between Vivendi and Mediaset resembled one of those continental TV sagas that repeats Dynasty’s tropes, only with classier suits. The bankable stars were Vincent Bolloré of France and Italy’s Silvio Berlusconi. The final episode in the current series played out on Monday, ending with a truce.
On the face of it, Mediaset, a Berlusconi business, has won the peace. Vivendi, the media group controlled by Bolloré, has agreed to sell most of its 29 per cent stake in its Italian competitor over five years. The shareholding has been a thorn in the side of Mediaset.
In reality, both sides may be deemed the losers.
The spat started when a deal for Vivendi to acquire Mediaset’s pay-TV assets collapsed in 2016. The transaction would have brought two of Europe’s most powerful media groups closer together via crossholdings. They would have had a better chance of withstanding US streaming services such as Netflix.
Bolloré then built his Mediaset stake as a means of influencing its plans. For example, Vivendi opposed a tie-up between the company’s Italian and Spanish businesses in 2019. When the transaction finally got past shareholders, it was blocked in the Spanish courts.
Consolidation will be back on Mediaset’s agenda — along with plans to headquarter the business in the Netherlands. However, five years has been lost while the two tycoons tussled. US rivals with global reach have conclusively outflanked European commercial broadcasters.
The market now sees linear TV as a niche for investors skilled in valuing diminishing cash flows. Shares in Mediaset reflect that, with losses of 30 per cent since the spat started. Total returns at Vivendi have been 80 per cent, thanks largely to its ownership of Universal Music, whose prospects streaming has revived.
The dim outlook for TV is not preventing either Vivendi or Mediaset from trying to buy French station M6 from RTL. That battle will have fewer viewers tuning in. The moral of the tale is that, when business imitates popular culture, investors lose out.