ITALY / Mediaset refuses to change its contract with Vivendi

Meeting on July 28^th, the board of directors of the Italian group Mediaset refused to renegotiate the terms of the agreement signed with Vivendi in April.

According to this contract, Vivendi was supposed to buy Mediaset Premium, a pay-TV platform, and buy 3.5% of Mediaset’s capital.

But on July 26^th the French group, owned by businessman Vincent Bolloré, announced it wanted to amend the terms of the deal, offering to buy only 20% of Mediaset Premium but increasing its share in Mediaset’s capital to 15% over three years via a convertible bond.

Mediaset’s board, which called the proposal “inadmissible”, has said it is ready to take “civil and criminal” action to force Vivendi to fulfil its original commitments.

Vivendi justified its U-turn because of “significant differences” with the Italian group over Mediaset Premium’s forecast results, denouncing a business plan “at best optimistic, probably impossible.”

Before the contract was signed, Mediaset announced its pay-TV platform’s budget would be balanced by 2017 and in profit by 2018. But the losses recorded in the first two quarters of 2016 (€63.7 and €37.1 million) raised doubts at Vivendi. In June the French group commissioned a report to reassess Mediaset Premium’s position.

A breach of contract would severely hamper Vivendi’s strategy, which is still hoping to create a “European Netflix” by forging alliances with key European players in the pay-TV market.

Sources: The World, Boursorama, The Financial Times