Mediaset faces challenge from holder of ex-Vivendi stock

Simon Fiduciaria, the company in which Vivendi placed the bulk of its shares in Italian broadcaster Mediaset to meet regulatory demands that it reduce its participation in the company, has demanded the suspension of the execution of resolutions passed by the Mediaset shareholders meeting in June relating to the creation of a medium and long-term incentive plan.

Simon Fiduciaria, which holds a 19.19% stake in Mediaset – leaving Vivendi with a 10% holding – has demanded the annulation, through a Milan court, of a proposal for a medium and long-term incentive and long-term incentive plan and authorisation of the board of directors to purchase and sell treasury shares to support stock options and other share-based incentive plans.

Simon Fiduciaria has also called on the court to ascertain and declare its right to particulate in shareholders meeting and to exercise all administrative rights inherent in the shares it holds.

Mediaset’s board claimed in June that the shares held by Simon were in fact owned by Vivendi in violation of the country’s Testo Unico dei Servizi di Media Audiovisivi e Radiofonici (TUSMAR) rules and the obligations assumed by Vivendi in its aborted agreement of April 2016, when the French media giant agreed to purchase Mediaset Premium, the group’s struggling pay TV arm, and to acquire a small stake in Mediaset proper as part of a long-term partnership between the pair.

Regulator AGCOM ruled last year that Vivendi’s shareholding in Mediaset – acquired in a series of moves after the pair spectacularly fell out over Vivendi’s decision to pull out of the April agreement – was in breach of the TUSMAR regulation that determines that electronics communications companies with a market share in excess of 40% cannot control more than 10% of a Sistema Integrato delle Comunicazioni (SIC) – meaning a large TV, radio and publishing outfit, such as Mediaset. This meant that Vivendi, which was the biggest single shareholder in Telecom Italia, with a stake deemed to mean it exercised effective control over the telco, could not simultaneously hold a large stake in Mediaset.

Vivendi subsequently moved to transfer its holding above the 10% threshold to a blind trust, while at the same time contesting the AGCOM ruling.

AGCOM noted Vivendi’s solution last April without endorsing it as a solution.

The regulator did however last week publish a decision it had taken some months earlier to the effect that Vivendi no longer exercised a controlling influence over Telecom Italia, the other leg of Vivendi’s problematic two-pronged drive to establish a presence in the Italian market, leading to speculation that Vivendi’s case that it was now conforming to Italian regulations in the case of Mediaset would be accepted.

Vivendi’s loss of control of Telecom Italia came after the coup initiated by activist investor Elliott Management, which saw Vivendi lose control of the telco’s board. Vivendi remains Telecom Italia’s largest single shareholder.