The focus of any talks would have to be determined, they told Reuters, but would involve Mediaset’s Premium TV unit and possibly other assets of the Italian group controlled by the family of former prime minister Silvio Berlusconi.

Vivendi and Mediaset have been at legal loggerheads since July, when the French group led by raider Vincent Bollore antagonized the Berlusconis by pulling out of a deal to take over Premium TV.

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Mediaset chief executive Pier Silvio Berlusconi, the son of the ex-premier, had opened the door to a deal with Vivendi on Wednesday although he said the French group had yet to come forward with an adequate proposition.

However, he clarified on Friday that with the first court hearing coming up at the end of March, the dispute with Vivendi had to be resolved legally.

One source familiar with the situation said Vivendi was waiting for “concrete evidence” that Mediaset is ready for another round of talks. “They have to put an end to the judicial saga,” the source said.

TV Commercials Won’t Die Anytime Soon

Another source close to the matter said Mediaset could consider dropping its legal action if Vivendi were ready to pay 1.5 billion euros ($1.6 billion). In August, the Italian broadcaster sought this sum in damages for backtracking on the pay-TV deal struck in April.
Since first filing the lawsuit against Vivendi to enforce the sale agreement, the French group has upped its stake in Mediaset to 28.8% — further angering Italy and the Berlusconis as it became the second biggest shareholder after the powerful family. This has fueled speculation, denied by Vivendi, that it may be plotting a hostile takeover of Mediaset.

Prolonged Standoff

The broadcaster also launched a new strategy for the pay-TV unit, rethinking its business, making it less costly and less centered on airing soccer matches.

“Vivendi’s decision to backtrack has also made it more difficult to sell the pay-TV unit … though this is not impossible,” Pier Silvio Berlusconi said, adding that no negotiations over the unit were underway.

Mediaset also asked a Milan court to order Vivendi to pay 50 billion euros for every month of delay in the deal, adding that if it fell through it would incur in damages of at least 1.5 billion euros.

Sector bankers following the situation expect a prolonged standoff between the two groups, and said it was not in Mediaset’s interest to drop the legal action because that is its sole bargaining tool against the French raider.

France’s Vivendi Does Not Plan Hostile Bid for Italian Broadcaster Mediaset

One banker raised the possibility that the Berlusconis might dispose of the entire group. “Time is on Bollore’s side, the situation is ideal for a typical Bollore-play and there is a good chance that the Italians will eventually sell,” the banker said.

Another banker said a possible scenario could be that Telecom Italia, in which Vivendi has a 24% stake, bought Mediaset Premium to distribute exclusive content to its large clients base. Vivendi, which is seeking to build up a media powerhouse in southern Europe, would then snap up Mediaset Espana, which is performing very well.

Under such a scenario, Mediaset would retain its free-to-air TVs and could merge its production unit Medusa with Vivendi’s Studiocanal, said the banker, who asked to be named because the deliberations are private.