Vivendi Acquires Pay TV Business of Italy's Mediaset -- WSJ
April 09 2016 - 2:31AM
Dow Jones News
By Nick Kostov
PARIS -- Vivendi SA has agreed to acquire the pay-TV business of
Italy's Mediaset SpA as part of a broader alliance, as the French
media firm snaps up assets to create a European rival to U.S.
streaming-video giant Netflix Inc.
Under the terms of the deal, Vivendi and Mediaset will swap 3.5%
stakes, the companies said on Friday. Reflecting Vivendi's
much-larger market capitalization, the French company will take
control of Mediaset's 89% stake in pay-TV unit Mediaset
Premium.
As part of the deal, Vivendi is buying the remaining 11% of
Mediaset Premium from Spain's Telefónica SA. Some analysts value
the pay-TV unit, which isn't profitable, at about EUR900 million
($1.02 billion).
The alliance with Mediaset is a key step in Vivendi Chairman
Vincent Bolloré's project to build a multilingual, pan-European
group to challenge Netflix and pay-TV giant Sky PLC. Vivendi and
Mediaset also said they would work together on a new European
streaming service.
"When Netflix announced it was opening in France, Spain, Italy,
it was clear Vivendi as a media company would have to adapt," said
a person familiar with Vivendi's thinking, adding that it also has
its sights on the U.S. market.
Subscription video-on-demand services such as Netflix and Amazon
Inc.'s Prime have sent traditional broadcasters scrambling, as the
emerging services gain millions of customers each year and built
libraries of their own content.
Netflix, which launched in Italy, Spain and Portugal last fall,
said in January it was expanding its Internet TV network to another
130 countries around the world. But European viewers, most of whom
prefer watching programs in their local language, pose a challenge
for the Los Gatos, Calif.-based firm. While it has a well-stocked
library of movies and TV programs in the U.S., Netflix has limited
offering in its European countries, where the content rights have
often already been sold to other distributors.
Vivendi is betting that it can copy Netflix's streaming service
in Europe by simultaneously buying rights in several territories.
Traditionally, studios have sold the rights for TV shows country by
country.
Vivendi is also buying some independent studios, underscoring
its belief that local content in countries like France, Spain and
Italy will appeal to large audiences in Africa and Latin America
that speak the same languages. On Friday, it said it would work
jointly with Mediaset to create content.
"If we want to be serious we have to invest in original local
content -- that's what makes the difference," Dominique Delport,
president of Vivendi Content, said earlier in the week.
To be sure, Netflix's global expansion has continued apace even
as streaming competitors emerge. In the latest quarter, Netflix
added four million international customers, ending with a total of
75 million subscribers.
Moreover, Netflix has a bigger budget for content acquisition
than local competitors. While much of its spending on original
content has been for premium English-language entertainment, it has
also been investing in local-language series such as the coming
political drama "Marseille," its first French original
production.
Mr. Bolloré has been pushing Vivendi to transform itself since
taking the helm of the once-sprawling conglomerate in 2014.
In recent months, he has shaken up its French pay-TV unit Canal
Plus and put a multibillion-dollar cash chest to work, buying large
stakes in Telecom Italia SpA and two French videogame companies,
Ubisoft SA and Gameloft SE.
Vivendi's share price, which rose 85 European cents to EUR18.42
on Friday, has dropped more than 20% over the last 12 months as
shareholders complained of a lack of clarity in the company's
direction. In its latest annual report,Vivendi said it still had a
EUR6.4 billion cash pile.
"The Mediaset Premium acquisition is the first stage in
Vivendi's project to create a global media group with Latin roots,"
said Jerome Bodin, an analyst at Natixis. "They're trying to create
a cultural group that's sufficiently large and homogenous to exist
on the global stage."
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
April 09, 2016 02:16 ET (06:16 GMT)
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