On Friday 8th April, after months of negotiations and financial gossip, it has been announced the alliance between two of the biggest European media groups in the ancient continent: Vivendi and Mediaset.
The agreement, between the French giant and the group set in Cologno Monzese, is directed both towards an industrial and a stock management way.
Actually, an important amount of 3,5% of Vivendi equity – value of 882 million euro –  will be exchanged with 3,5% of Mediaset one – value of 144,7 million euro-, and with the entire block of shares of Mediaset Premium.
The key point of this quite elaborate plan lies here: the difference in the capitalization is about 750 million euro and Vivendi will use it to purchase the 89% of Mediaset Premium, which is held by Mediaset (even if through the controlled company RTI). The remaining 11% is held by Telefonica and is going to be transferred to Vivendi through a drag along clause, which is in the rights of Mediaset’s controlled company RTI. At the end of the story Vivendi will not pay one euro, but will have a three years lockup over Mediaset’s shares, avoiding this way the possibility of holding more than 5% of its shares.
The two great players of this important financial operations are certainly Mr Vincent Bollorè, the control shareholder of Vivendi, and Mr Piersilvio Berlusconi, the Ceo of Mediaset Group. However director, the deus ex machina as ancient Latins would have said, has been the French-Tunisian entrepreneur Tarak Ben Ammar, a closer friend of both Bollorè and Berlusconi families. He has been promoting and working for the agreement during these months, and that also pushes to create in the future a three poles structure together with Telecom.

Once examined the financial operation, there are three main conclusion that can be drawn:

Firstly, through this operation is possible to create a strong European media alliance, a sort of United Artists, able to challenge Sky and Netflix, which today are ahead of the market as regard production of contents and distribution.
In this way both parties can be notably better off: on one hand, Mediaset could exploit the great distribution channel of Vivendi, who covers almost the entire Europe and that aims to expand also to South America – and why not through using the power of Telecom, controlled by Vivendi itself?-. Furthermore, it could gain contractual and negotiating power as concern broadcasting rights. On the other hand,  Vivendi could unify into a unique pay tv Premium with Canal+, which is already in its portfolio. Therefore, it could also take advantage of the several assets of Premium, such as the possibility of developing contents through Medusa company, the Champions League broadcasting -rights until 2018 and its eight thematic channels.

Secondly, under Mr Bollorè leadership, Vivendi has accumulated a 24.9 % stake in Telecom Italia during the past nine months. However, the asset sale in Africa, France and Brazil has left Vivendi a huge cash pile which, even after its investments in Telecom Italia, was about €6.4bn at the end of December.
Hence, the Breton entrepreneur is able to continue in his investing campaign in Italy: after Mediobanca, Generali and Telecom, he can take the control of another Italian-made company. Moreover he can seat in another Italian board, going on in his personal “game of thrones”.

Thirdly, Berlusconi family has been able to sell a company that has never been producing a profit for eight years. Despite the fact that creating a successful pay-tv has always been an obsession for Piersilvio, there have been too many managerial mistakes and inaccuracies, such as the 650 ml euro spent to buy Champions League broadcasting rights, that will be never paid back.
Furthermore, in this way, Fininvest, the Berlusconi’s family holding, can focus on the traditional publishing industry with the acquisition of “RCS Libri” and on the digital publishing and radio with the acquisitions of Banzai and Finelco group, that seem to be very profitable and full of synergies for many businesses of the group.

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