ROME – Silvio Berlusconi’s Mediaset is reportedly in advanced talks to raise its stake in Spanish paybox Canal Plus by making a joint bid with Spanish telecom Telefonica for the 56 percent Canal Plus portion held by principal shareholder Prisa TV. The deal would pave the way for the start of a new pan-European pay-TV powerhouse.

Leading Italo financial daily Il Sole 24 Ore has reported that Mediaset and Telefonica are preparing a joint bid for Prisa’s controlling Canal Plus chunk after Telefonica was negotiating to purchase Digital Plus on its own, as widely reported.

On Friday the telco said a decision had not been made. Mediaset and Telefonica each hold a 22 percent Digital Plus stake and both have an option to match any offers from other prospective buyers to become the winning bidder. This gives them considerable leverage.

Mediaset executive VP Pier Silvio Berlusconi (pictured) in December last year announced plans to set up a separate pan-European pay-TV unit that would hold 100 percent of Mediaset’s Italian paybox, Mediaset Premium, and its 22 percent Spanish Canal Plus stake. Mediaset is now said to be in talks with Al Jazeera to become its pay-European pay-TV partner. Al Jazeera has also been reportedly circling Canal Plus in Spain.

According to Il Sole and other sources Mediaset and Telefonica have been fine-tuning details of a joint 50/50 bid that would allow them to lowball the Digital Plus price tag after Telefonica balked at Prisa’s Euros 800 million ($1.1 billion) asking price and Prisa turned down Telefonica’s Euros 600 million ($830 million) offer.

Due to the country’s economic crisis, Canal Plus’ subs in Spain decreased from 1.719 million in 2012 to 1.633 million for the most recent available figure in 2013. That drop is affecting the paybox’s price tag. Digital Plus also operates leading online video-on-demand  platform, Yomvi.

Mediaset and Telefonica are also reportedly discussing the key issue of Canal Plus governance, with Mediaset looking to head up the paybox’s management thanks to its TV know-how. Mediaset is the top generalist TV player in Spain, besides being Itay’s top private free-TV operator.

In February Mediaset aggressively snapped up prime Champion’s League European football rights for the 2015-2018 seasons for a reported whopping Euros 700 million ($970 million) in a surprise move likely to boost Mediaset Premium which has over two million subs and make it more attractive for possible prospective partners such as Al Jazeera. The Italo pay-TV market is dominated by Rupert Murdoch’s Sky Italia service which has more than 4.7 million paying viewers.