U.S. Markets closed

Vivendi's 'fair warning' to Mediaset leaves door open to talks: sources

By Mathieu Rosemain, Gwénaëlle Barzic and Giulia Segreti
The Vivendi logo is pictured at the main entrance of the entertainment-to-telecoms conglomerate headquarters in Paris, March 10, 2016. REUTERS/Charles Platiau/File Photo

By Mathieu Rosemain, Gwénaëlle Barzic and Giulia Segreti

PARIS (Reuters) - French media giant Vivendi is still open to an alternative deal with Italian broadcaster Mediaset over its pay-TV unit despite a "fair warning" it gave on Wednesday, two sources close to the matter said.

A deal with Mediaset, controlled by former Italian prime minister Silvio Berlusconi, represents a key plank of the strategy laid out by billionaire Vincent Bollore, Vivendi's chairman and biggest shareholder, who has pledged to transform the group into an integrated European media powerhouse.

Yet the two companies have officially been at odds since Vivendi said in July it backed out of a binding agreement that would give it full control of Mediaset's pay-TV unit Premium and hand the two companies a 3.5 percent stake in each other.

In a statement released on Wednesday, Vivendi said it was no longer keen on finding an amicable solution to its dispute with Mediaset, following several accusatory statements by the Italian broadcaster, which recently asked a court to order the seizure of a 3.5 percent stake in Vivendi.

That particular legal action infuriated Vivendi, the sources said. The first hearing to decide on Mediaset's request is slated for Nov. 8. another source told Reuters last week, just a day before a scheduled board meeting at Vivendi..

"Enough is enough", a source close to Vivendi said on Wednesday. "We've made a lot of efforts to find a solution. This is a fair warning."

In response to Vivendi's statement, Mediaset denied the French firm's assertion on Wednesday that "incessant attempts" had been made to find alternative solutions since July.

Vivendi declined to comment beyond the statement it released.

Top managers of Vivendi and Mediaset have not met since July but indirect contacts between Mediaset and Vivendi have taken place over the period through Mediobanca, a source close to the matter said.

Under the preferred alternative scenario Vivendi is currently working on, Mediaset and Vivendi would get 40 percent of Premium each and a third party, most likely an investment fund, would get the remaining 20 percent, the same source said.

(This version of the story corrects day in sixth paragraph)

(Reporting by Mathieu Rosemain and Gwenaelle Barzic in Paris, Giulia Segreti in Milan; Editing by Leigh Thomas)