Media Moguls' Grand Plans Are Mired in Bitterness -- WSJ
Berlusconi and Bolloré still want to establish the Netflix of Europe, but a feud took shape
Two of Europe's richest men want to remake the Continent's turmoil-wracked media business. First, they have to patch up their tattered personal and business relationship.
In January 2016, Silvio Berlusconi, the television mogul and flamboyant former Italian prime minister, sat down for lunch with a longtime friend and business partner -- Frenchman Vincent Bolloré, whose media conglomerate Vivendi SA spans music, TV and videogames. The lunch, at Vivendi's Paris headquarters overlooking the Arc de Triomphe, eventually blossomed into a bold, joint ambition: to create the Netflix of Europe by stitching together local content and distribution across the Continent.
"We talked about where the world is going," said another person at the lunch. "The industrial desire to get married, to work together was on the table," this person said.
More than a year later, those efforts have unraveled into bitterness, pitting Mr. Bolloré's Vivendi against Mr. Berlusconi's Mediaset SpA in one of Europe's biggest recent corporate standoffs. Over the summer, as Mr. Berlusconi was recovering from open-heart surgery, Vivendi backed out of a deal to buy Mediaset's premium pay-TV service, publicly questioning its performance.
Mediaset sued. Then in December, Vivendi started accumulating Mediaset shares on the open market, eventually spending EUR1.26 billion ($1.38 billion) for an almost 30% stake. Mediaset accused it of orchestrating a hostile takeover.
Both sides still want a friendly deal, according to people familiar with each camp. People familiar with Mr. Bolloré's thinking say he is counting on his large stake in Mediaset to force Mr. Berlusconi to the table.
"There are many reasons why it's a win-win situation for both companies to resolve this conflict," said Vivendi Chief Executive Arnaud de Puyfontaine.
People familiar with the view of Mr. Berlusconi and Fininvest SpA, the family holding company that controls Mediaset with a 40% stake, said he isn't rolling over and wants Mr. Bolloré to return to the original pay-TV deal.
Italian regulators strengthened Mr. Berlusconi's hand earlier this month, ruling Vivendi must sell either its Mediaset shares or its 24% stake in Telecom Italia, SpA, the telecom carrier that many executives see as more important to Mr. Bolloré's pan-European media ambitions. Vivendi said it would appeal.
A detente could reshape Europe's media landscape, where insurgent competitors are elbowing in on the turf of established players. Cooperation between Messrs. Bolloré and Berlusconi would consolidate their positions with a collection of content and distribution assets across Europe.
When the two companies were getting along, executives on both sides touted the idea of building a rival to Netflix Inc., the U.S. streaming service that is expanding rapidly across Europe. A particular strength of a Vivendi-Mediaset tie-up would be local-language content, which is currently in short supply at Netflix.
Other competitors, meanwhile, are roiling the industry. Rupert Murdoch's 21st Century Fox Inc. is seeking regulatory approval for a $15 billion deal to buy the 61% of British pay-TV giant Sky PLC it doesn't already own. That move would further bolster those two companies' content and reach across Europe. Mr. Murdoch and his family are major shareholders of both 21st Century Fox and News Corp, the owner of The Wall Street Journal.
Mr. Bolloré, 65 years old, has made a fortune by swooping in and seizing control of businesses -- sometimes in quick takeovers, and other times through slow, steady stake-building. In less than two years, he built a 5% stake in Vivendi into a 20% controlling interest.
Under Mr. Bolloré, Vivendi targeted assets to marry with its existing core media businesses including Universal Music Group and French pay-TV company Canal Plus. Last year, he orchestrated a hostile takeover of mobile-game developer Gameloft SE.
He has also built up a roughly 25% stake in Ubisoft Entertainment SA, the maker of the "Assassin's Creed" videogame series. Ubisoft Chief Executive Yves Guillemot recounts that two hours after a friendly call with Mr. Bolloré, Vivendi surprised him by announcing it had bought up 6.6% of the company.
"It was a really bad start," Mr. Guillemot said. Vivendi wants board representation but has been rebuffed by Mr. Guillemot.
In September, Mr. Bolloré sent an email to Mr. Berlusconi on his 80th birthday, wishing him a speedy recovery from his heart surgery, according to a person familiar with the matter. Mr. Berlusconi responded almost immediately. He thanked him, saying "'let's hope we can finally work together." Since then, though, the companies have had virtually no contact, people familiar with the situation say.
--Stu Woo contributed to this article.
Write to Nick Kostov at Nick.Kostov@wsj.com and Manuela Mesco at manuela.mesco@wsj.com
(END) Dow Jones Newswires
April 28, 2017 02:47 ET (06:47 GMT)