Viv U, News Corp. deal then disagree

Canal Plus looks unlikely to accept restrictions

PARIS — Vivendi Universal buried the hatchet with Rupert Murdoch by selling its 14% stake in his Blighty satcaster BSkyB in a $2.5 billion deal Tuesday — only to start a new row with the mogul over a stalled Italian pay TV deal.

The relationship between the media congloms has been strained since Viv U bought the BSkyB shares in 1999. And that looks set to continue after Viv U subsid Canal Plus said Tuesday that it would examine 10 tough conditions Italo antitrust authorities slapped on the merger of its paybox Telepiu with News Corp.’s Stream before deciding whether to go ahead.

Canal Plus looks unlikely to accept the restrictions, announced Monday, which are aimed at preserving competition.

That bought a swift response from Murdoch, who told analysts in a conference call: “If Vivendi doesn’t go through with the deal we’ll sue them. Stream will stay in business as a very active competitor.”

Viv U topper Jean-Marie Messier said in April that he was ready to pull out of the deal to merge the money-losing payboxes.

The antitrust restriction that will most worry him covers soccer broadcast rights, which restricts contracts to two years and gives clubs the right to break the contract without penalty.

Ferocious soccer rights rivalry between Stream and Telepiu nearly bankrupted the services. Stream, with almost 700,000 subscribers, is estimated to have lost $200 million last year while Telepiu, with twice as many subs, is said to have lost $300 million.

Under the merger, agreed to in February, Telecom Italia would sell its 50% stake in Stream to News Corp. and Viv U, which would simultaneously buy 100% of Stream via Telepiu.

Messier is under pressure from shareholders to get the media conglom’s massive $15 billion debt under control. Viv U shares gained 3.2% to $28 after the Italian ruling, boosted by the BSkyB sale, which underscores the media giant’s need for quick cash.

Europe’s TV market has seen a meltdown of its payboxes. Fallen Teutonic giant Kirch Group’s Premiere is largely responsible for bankrupting Kirch Pay TV and Kirch Media. The U.K.’s ITV Digital died a slow and painful death earlier this month, finally forcing owners Granada and Carlton to pull the plug. Meanwhile in Spain, digital TV platform Quiero called it quits the same day.

(Reuters contributed to this report.)