Vivendi Universal boss Jean-Marie Messier today forecast swift regulatory approval for the Italian pay-TV venture with Rupert Murdoch's News Corp that he announced today.
Messier said that Vivendi Universal will have two-thirds of a joint venture which will be born from the merger of Vivendi's Telepiu and the News Corp-Telecom Italia-controlled Stream.
Terms of the new venture have still not been detailed, but Messier outlined the deal at a meeting with analysts following a Vivendi board meeting.
Telecom Italia is expected to give up its 50% stake in Stream in exchange for full-control of free-to-air broadcaster Tele Monte Carlo (TMC). That will then leave News Corp and Vivendi free to pool their loss-making companies in a single platform. It is to retain the Telepiu brand name.
"We have concluded an agreement for the merger of Telepiu with Stream on the basis of the relationship between the existing subscribers. Canal Plus will hold two thirds and Rupert Murdoch a third,'' Messier told Les Echos. With 1.8 million customers of a combined 2.6 million Vivendi will get 66% and News Corp 34%.
News Corp has a three year option that would allow it to invest a further $500m to increase its stake to 50%.
A merger would presumably lead to reduced competition for rights and may need to be referred to the European Commission on anti-trust grounds. But Messier said he was confident he could win EU approval for inside four to five months. The Italian communications ministry today signalled its approval for the deal.
The two competing operators, which have been waging a cut-throat war for exclusive Italian soccer rights, are drowning in red ink -- a Euros 200m loss in 2000 for Telepiu and Euros 400m loss for Stream, which also incurred heavy start-up costs since Murdoch bought into it last year.
"If the merger comes into force quickly, it should allow (the new entity) to break even in two years time,'' said Jacques Falzon, analyst at KBC Securities.
Messier also appears to be moving quickly to tidy up its pay-TV holdings in Poland (Screendaily, April 23).
Vivendi Universal also announced first quarter profits with 13% revenue and 112% ebitda growth to Euros951m for its media and communications divisions, compared with a pro-forma Euros488m in 2000.