Mediaset Stock Slumps Amid Vivendi Showdown

Mediaset Tower H

It's all-out media war between the two European giants after a failed deal.

The rift between Mediaset and Vivendi over the French company's plan to acquire pay TV business Mediaset Premium has reached a boiling point after Vivendi dashed any hopes of a compromise between the two companies over the mega-deal gone sour. Mediaset's stock experienced another sharp drop on Thursday as a result.

Mediaset intends to fight the dissolution in court, but the damage has already been done, as its market value has dropped 19.5 percent, or €700 million ($763 million), since the deal crumbled. 

Vivendi said Wednesday in a statement it is "no longer willing to give priority to finding an amicable solution and reserves the right to take all necessary action to defend its interests and those of its shareholders." It claimed the companies had been open to a peaceful compromise, but Mediaset only responded with "aggressive public statements and to initiate legal action." 

Italian newspapers have dubbed the ongoing dispute a "total war" between the two media giants. 

Back in April, Vivendi struck a deal with Mediaset to acquire its Mediaset Premium, in the hopes of creating a Southern European media empire to rival pay TV giant Sky and the rising Amazon and Netflix. Mediaset's stock rose sharply. According to the plan, Vivendi was to acquire 89 percent of Mediaset Premium, then valued at $1.02 billion, as well as acquiring the remaining 11 percent held by Spanish Telecom. 

But the deal never went through. In July, Vivendi chairman Vincent Bollore reneged on the binding agreement, calling Mediaset's financial projections "unrealistic." Mediaset claimed Vivendi knew what it had signed up for, and the resulting fallout has led to months of back-and-forth between the two companies with very public disagreements. 

Mediaset is seeking an Italian order for the seizure of a 3.5 percent stake in Vivendi. The company will have its first hearing in court on Nov. 8, but the damage has already been done. Its stock shed as much as 6 percent on Thursday. A hearing on the enforcement of the contract is set for March 21 of next year, but any ruling could take years.

Investors also are worried that the gridlock may prevent Mediaset from bidding next year for the highly profitable soccer rights for Italy's Serie A League and the European Champions league.