(Bloomberg) -- Rupert Murdoch's Sky Italia unit forged a surprise pay-TV alliance with Silvio Berlusconi's Mediaset SpA, dealing another potential blow to French billionaire Vincent Bollore's expansion in the country.
Sky Italia and Mediaset announced a content and distribution deal late Friday that opens the way to collaboration between the two media groups. Bollore's Vivendi SA is locked in a legal battle with Mediaset, Italy's biggest commercial broadcaster, after the French conglomerate pulled out of a 2016 deal to buy Mediaset Premium for about 800 million euros ($986 million).
Under Friday's agreement, Sky Italia's satellite customers will have access to Mediaset Premium's Cinema and Serie channels, according to a Mediaset statement. In addition, Sky Italia will be able to use Mediaset's pay-TV platform for digital terrestrial television (DTT) distribution. This will allow Sky Italia to create its own pay-TV offer on DTT, combining Sky, Fox and nine Mediaset channels.
Bollore's recent investments in Italy, the euro region's third-largest economy, have been challenged by regulators and activist investors. Vivendi, the second-largest investor in Mediaset after the Berlusconi family, has tried to reach a settlement over their pay-TV dispute but so far has been unsuccessful.
Now, Paul Singer's fund Elliott Management is battling Vivendi for influence at Telecom Italia SpA, Italy's biggest phone carrier. Vivendi, which owns 24 percent of the company, faces a showdown with Elliott next month at an investors meeting after the U.S. fund built up a stake of about 6 percent and demanded that Vivendi directors resign.
Elliott has criticized Vivendi's strategy at Telecom Italia, arguing that it's hurt the carrier's share performance and failed to reduce debt.
To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net.
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Dan Liefgreen, Nikos Chrysoloras
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