Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Murdoch's News Corp., Vivendi End Hostilities

LONDON -- Rupert Murdoch's News Corp. put an end to hostilities with French-American rival Vivendi Universal on Saturday and agreed a preliminary deal to buy its Italian pay-TV operator for some 1 billion euros ($946 million).

After a tense few months between the warring media giants, the two sides said they would postpone ongoing litigation between their TV empires as part of the Italian agreement and withdraw outstanding lawsuits when the deal closes.

Murdoch, who signed a "memorandum of understanding" with Vivendi executives at his flat in London on Saturday, also agreed to reimburse Vivendi 500 million euros for sports rights and the sale of licenses. The combined 1.5 billion euros includes 750 million of debt and the rest in cash, Vivendi said.

Murdoch, who has for long sought a decent foothold in Italy to expand his European empire, plans to merge Vivendi's Telepiu with News Corp.'s smaller Italian pay television operator Stream to become Italy's sole pay TV operator in a move to stem huge losses after a damaging battle for subscribers.

Vivendi's embattled chief Jean-Marie Messier has been under pressure to sell off assets to soothe anxious investors and cut a huge debt pile amassed in an acquisition frenzy. Vivendi said the deal would cut its debt by 1.2 billion euros on completion.

The deal marks a stark turnaround in just a year that has seen two previous deals collapse including recent plans for Vivendi to buy out News Corp.'s Stream. News Corp. said Saturday's deal was subject to agreement from its existing Italian partner Telecom Italia, due diligence and regulatory approval.

News Corp. said it would take 50 percent of the combined Telepiu/Stream platform and its 2.35 million subscribers. It was not immediately clear who would own the remaining 50 percent, but sources familiar with the talks said Friday other investors were being recruited and may include Telecom Italia.

Despite burying their grudges, the two sides issued conflicting statements on the deal.

News Corp. said the deal valued Telepiu's subscribers at the same price agreed in an earlier deal to sell Stream to Vivendi -- or $600 according to comments made by Messier last year. News Corp. said the 1 billion euro price tag included 450 million cash on completion, with the rest payable over five years.

In contrast, Vivendi said it was receiving 1,000 euros per Telepiu subscriber -- a figure that includes the 500 million euro reimbursement for future Italian Serie A soccer broadcast rights and the sale of two terrestrial licenses.

Nevertheless, the media rivals said they would pull out of ongoing litigation if the deal completes. Most notably, that includes a suit filed by Vivendi's TV arm Canal Plus against News Corp.'s software arm NDS accusing NDS of trying to undermine its Paris-based rival by encouraging piracy.

Telepiu is the bigger of Italy's two pay-TV operators with some 1.5 million subscribers but lost 220 million euros in 2000. Stream by comparison has around 800,000 subscribers and lost 400 million euros in 2000 plus a similar amount last year.