Mediaset says Vivendi ends interim management accord over pay-TV unit
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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
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By Giulia Segreti
MILAN (Reuters) - Mediaset said on Thursday Vivendi had told it in a letter that an interim management accord over its pay-TV unit no longer stood, prompting the Italian broadcaster to blame the French media group for paralyzing the unit's operations.
Mediaset said Vivendi's letter, dated Oct. 18, sought to avoid further damage after Mediaset Premium TV was unable to make key investment decisions and prepare its subscription and football campaigns.
The two companies have been locked in a months-long feud since Vivendi in July backed out of a deal struck in April to buy Mediaset's pay-TV arm.
Mediaset, controlled by former prime minister Silvio Berlusconi, said the letter came too late after Mediaset Premium had suffered "enormous" damage because of the organizational paralysis.
"The main consequence of today's formal letter is the implicit recognition of the validity of the existing contract," Mediaset said.
Vivendi declined to comment.
The interim management accord had been struck as part of the April deal which envisaged the finalization of the sale by Sept. 30.
The French company, led by Vincent Bollore, backed away from the deal to give it full control of Mediaset Premium, part of Vivendi's plans to create a European media giant.
Vivendi said on Wednesday it was no longer keen on finding an amicable solution to the dispute with Mediaset, which last week had asked a court to order the seizure of a 3.5 percent stake in Vivendi.
The Italian broadcaster is also suing Vivendi for damages and is asking Milan judges to enforce the pay-TV contract.
According to one source close to the matter, Premium TV did not renew a contract to air two Disney channels after it expired in July and is cutting spending to a minimum on its advertising campaign for the Christmas season.
"The impasse has already damaged them on the market and in the interim they will have problems with advertising and new investments," a Milan-based analyst, who did not want to be named, said.
Mediaset has lost 19.5 percent - or 700 million euros from its market capitalization - since Vivendi's change of heart over the Premium deal.
On Thursday, its stock shed as much as 6 percent. Shares closed 3.4 percent lower at 2.62 euros.
"The market has already shown it does not appreciate the prospect of a long legal battle with Vivendi," broker ICBPI said in a report.
A decision on Mediaset's request to seize Vivendi shares is set for Nov. 8. The first hearing on the contract enforcement will be on March 21. But a final ruling, in a system which envisages up to two appeals, could take years.
The deadlock with Vivendi also raises questions over whether Mediaset Premium will be able to bid for two soccer TV rights tenders for Italy's top Serie A league and for Europe's Champion's league which are due to be held in spring next year.
In 2014, Mediaset spent an estimated 700 million euros for the right to air Champions League soccer matches in Italy for the three seasons starting in 2015.
(Additional reporting by Stephen Jewkes and Valentina Za, Editing by Jane Merriman and Alexandra Hudson)
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