The transfer of Premium: Mediaset and Vivendi break up
by Camillo De Marco
- The Italian group has rejected an alternative proposal by Vivendi and is threatening legal action. Bolloré: "We honour our contracts"
Just three months after the news (see article) that an agreement between the two parties over pay TV channel Premium had been reached, the alliance between Mediaset and techno giant Vivendi has collapsed, with the prospect of a court case looming on the horizon.
After rejecting a new proposal by Vivendi, deeming it to be “inadmissible as it is incompatible with the binding contract already signed”, the board of directors of Mediaset, which met yesterday, empowered its directors to “adopt all appropriate actions to ensure that Vivendi performs the contract and, if the latter fails to take action, to take actions under civil and possibly even criminal law to protect the interests of the company”. According to the Berlusconi family, the “real” and “hidden” objective of the French group was to “surreptitiously” carve out a “status of importance” for itself in Mediaset.
The agreement signed in April provided for a partnership through the exchange of shares: 3.5% shares in Vivendi in exchange for 3.5% shares in Mediaset plus 89% in Premium (with the remaining 11% to be held by Spanish company Telefonica, to be transferred at a later date). In addition to this, the agreement contained a lock-up clause, under which each company would have to keep their stake in the other for at least three years, during which period Vivendi would be able to go from holding 3.5% to a maximum of 5% of Mediaset’s capital. But in the last few days, the Italian company announced that Vivendi had waived 100% of its shares in the pay TV channel to present an alternative plan that would reduce its stake to 20% and increase its stake in the entire group to 15% over three years.
Vivendi, for its part, still believes an agreement with Mediaset over Premium is possible, but “refuses to accept the accusations that it does not honour contracts” and “reserves the right to take measures to protect its honour”, including suing for slander. A spokesperson for the French group, which is headed up by financier Vincent Bolloré, explained to news agency ANSA that more specifically, an in-house analysis of the business plan for Mediaset’s pay TV channel revealed it to be “overly optimistic” and unfeasible.
The first six months of the year have seen Mediaset clock up €27.8 million in debt, compared to €24.2 million in profit in the same period last year. The management at Mediaset puts this financial damage down to the agreement with Vivendi: in the second quarter, explained a memo, “we had several one-off payments to make solely in relation to the contract, worth €34.6 million".
(Translated from Italian)