ROME – French media giant Vivendi is planning to set up a joint venture between its Canal Plus pay-TV unit and Telecom Italia, which it controls, to produce premium movies and TV series in Italy.

The move comes as Vivendi tightens its grip on management of Telecom Italia, Italy’s top telco, in which the French conglomerate owns a controlling 24% share.

It is also in line with Vivendi’s stated ambition to become a Southern European media powerhouse, a goal it previously pursued in 2016 when it forged an alliance with Silvio Berlusconi’s Mediaset broadcaster. That pact hit the skids a few months later when Vivendi pulled out.

Vivendi CEO Arnaud De Puyfontaine, who is also Telecom Italia’s acting CEO, first mentioned the plan last Friday in a conference call with analysts. Sources say the plan entails setting up a joint production and acquisition company, in which Canal Plus will be be the minority partner, that would become operational in a few weeks.

A number of high-end TV and film projects with strong Italian appeal, but also made for the international market, have been identified. The plan is for the first projects to start production in October and to go out eventually on a commercial streaming channel via Telecom Italia, which has more than 12 million broadband customers in Italy.

It remains unclear whether Vivendi’s plans also involve the acquisition of Italian sports rights, a key pay-TV platform driver, but that is certainly a possibility.

Tim Westcott, senior analyst at London-based IHS, said the convergence between TV content and distribution that Vivendi is pursuing in Italy is a good fit even though Italy already has two major pay-TV platforms, Rupert Murdoch-owned Sky Italia and Mediaset Premium.

“We’ve seen the pay-TV market becoming a bit broader, with more companies coming in against the market-leading pay-TV platforms, and often they are actually telcos,” Westcott said.

He noted that, in the U.K., BT has gone up against Sky, “even though Sky is the market leader,”  and in France – Canal Plus’ home market – a number of telcos offer pay-TV services, including Orange and SFR, which is now owned by Netherlands-based telecoms and cable group Altice.

However, Westcott said Vivendi’s position in the Italian market is complicated by the fact that, besides its 24 % stake in Telecom Italia, the company also holds a 29.9% stake in Mediaset, which it built up aggressively after the 2016 deal with Mediaset went sour. The two groups are currently engaged in a fierce legal battle.

“Before launching any joint venture between Canal Plus and Telecom Italia, Vivendi will have to sort things out with Mediaset,” Westcott said. In April, Italian media regulator Agcom ruled that Vivendi’s holdings in both Telecom Italia and Mediaset violate the country’s anti-trust laws and ordered Vivendi to reduce its stake in one of the two companies.

It’s quite clear that Vivendi will not be reducing its stake in Telecom Italia.

Last Friday, Telecom Italia appointed Amos Genish, formerly chief convergence officer at Vivendi, as the telco’s Rome-based managing director, just days after it removed Flavio Cattaneo as Telecom Italia’s CEO. Cattaneo has been temporarily replaced by De Puyfontaine. Cattaneo reportedly received a 25 million euro ($29 million) severance package, one of the richest golden parachutes ever granted in Italy.

Vivendi’s tighter grip on Telecom Italia is seen as paving the way for the telco’s joint content venture with Canal Plus. Canal Plus, which is currently struggling financially from erosion of its subscriber base, has produced some of France’s biggest domestic and international TV hits, including “Versailles” (pictured) and “The Returned.” Vivendi also owns film studio Studiocanal.

As to whether Vivendi will pursue the purchase of premier league Serie-A Italian soccer rights, which are up for grabs, sources say it is a definite possibility. “Telecom Italia has in the past actually had rights to Serie A,” Westcott noted.