Canal Plus close to Italy merger

Canal Plus chairman Pierre Lescure was fired in April, partly over plans to merge with Italian broadcaster Stream

PARIS, France -- Vivendi Universal's pay-television unit Canal Plus has moved a step closer to completing a controversial merger of its Italian operations and digital broadcaster Stream.

Canal Plus, Europe's largest pay-TV group, said it is studying conditions imposed on Monday by Italy's anti-trust authority after it approved the deal between Stream and its unit Telepiu. Both have been competing for the same viewers, especially in the area of football broadcasts.

The Italian regulator set out 10 conditions for the merger, which was agreed to in February pending a 45-day investigation into concerns it could restrict competition. Last year, regulators blocked an original merger plan between the two loss-making companies.

"Before responding, Vivendi Universal and the Canal Plus group ... wish to examine closely the new conditions imposed by the anti-trust (authority) ... in order to evaluate the future financial viability of the merged entity,'' Canal Plus said in a statement on Tuesday.

Vivendi (PEX) shares rose more than 5 percent in early Paris trading on Tuesday. The stock was also boosted by an announcement on Tuesday that the French media giant had sold a $2.4 billion stake in British broadcaster BSkyB through a market sale.

"In the medium term this is good news for Vivendi because it means consolidation in the Italian pay-TV market. In the short term it costs money,'' a Paris trader told Reuters.

The deal would create a single pay television network in Italy and is expected to plug a revenue hole for both companies.

One of the conditions imposed by the regulator is a restriction on the length of Telepui's rights to broadcast football games and an outright ban on exclusive deals with individual teams.

Telepiu broadcasts games involving Italian teams Inter Milan, AC Milan and league champions Juventus, while Stream carries matches with Rome clubs Lazio and Roma.

The merger was among the main issues blamed for a corporate row that led Vivendi's Chief Executive Jean-Marie Messier to fire Canal Plus chairman Pierre Lescure in April.

Lescure had complained that his concerns about the high cost to Vivendi of the Stream-Telepiu merger tie-up had been ignored by Messier, who countered by claiming Lescure had failed to improve Canal Plus's own finances.

The merger deal would see Telecom Italia selling its 50 percent stake in Stream to Vivendi and Rupert Murdoch's News Corp. Vivendi would then buy 100 percent of Stream through Canal Plus.

Details of the complex deal have not been disclosed.