TIM, Mediaset can hack it without Vivendi, says blinkered gov’t official

Amid a period of disarray in Italy’s media industry, an Italian government official has chipped in by urging French mass media firm Vivendi to get a move on with its long drawn out plans to launch a European OTT service, before 21st Century Fox and Netflix conquer the market.

Speaking to Italian news outlet La Stampa, Antonello Giacomelli suggested an industrial agreement between telco Telecom Italia (TIM) and broadcaster Mediaset, which Vivendi holds stakes in of 23.9% and 29% respectively, using Mediaset content on TIM’s network to get an enticing OTT offering off the ground.

However, Giacomelli’s words of advice heeded a warning of the dangers of putting too much power into the hands of Vivendi – a company which has become infamous for its aggressive takeovers and questionable business practices. He says a deal should be struck under the one condition that “Italy must remain the protagonist,” meaning TIM and Mediaset should handle the development of a service independent of Vivendi’s meddling.

Yet Giacomelli fell short of any suggestions for how Italy can build a position of power in this proposed joint venture, as the country’s home grown firms come under increasing pressure from nearby players in France and Germany, let alone the US content powerhouses.

Just last month, Faultline Online Reporter suggested that TIM and Mediaset will struggle to succeed in driving OTT opportunities without the helping hand of Vivendi – and we feel the sluggish activities of Italian players in OTT video is something Giacomelli has overlooked.

Despite Vivendi’s reputation, the benefits of cross-collaboration between European media companies to stave off the US giants is a necessary one, with Giacomelli describing the potential deal as “desirable” both in the interests of the general public and for allowing both companies to grow.

This deal makes much more sense than Vivendi taking over Mediaset’s pay TV business, which collapsed in dramatic and very public fashion, and Faultline Online Reporter has highlighted Vivendi as one of only a handful of companies which has the resources to build out a continent-wide OTT video service.

It is likely that Giacomelli felt it necessary to give a press interview less than a month after the CEO of TIM departed the company, apparently by mutual consent, so that the Undersecretary of State of the Ministry of Economic Development could assert some sort of influence on the company’s next CEO, before Vivendi’s tightening grip on TIM becomes unassailable.

An agreement to deliver Mediaset content using TIM’s network infrastructure outside of the Italian border is a practical one, particularly given the poor state of Mediaset’s pay TV business. In fact, rumors surfaced last month of a similar move in which Vivendi reportedly plans to launch a joint TV channel through TIM and its French pay TV subsidiary Groupe Canal. The service will be an Italian version of Canal+, offering sports and entertainment content, plus investment in original series to come further down the line, although there have been no suggestions yet for delivering the channel OTT.

However, this would put Canale Italia in direct competition with the struggling Italian pay TV business Mediaset Premium, rather than supporting and developing it. Judging by Giacomelli’s interview, this is exactly the type of deal he is keen to avoid – one branded with French influence while the Italian “sign” is squeezed out.

“I think of a problem far beyond the fate of Mediaset’s single shareholder Berlusconi. To avoid leaving the cultural supremacy of content on Fox and Netflix, Europe needs to be aggregated. In entertainment Italy has a role to play in saying that it is a good collaboration with France as long as our role is not always to give up,” said Giacomelli.

The interview also touched on the sensitive subject of the attempted privatization  of Italy’s ultra-fast broadband network, which Giacomelli did not shy away from slamming as a mistake. Although he is optimistic for the renationalization, saying, “More than two years ago, we decided to invest the state and the regions with €7 billion, after we realized that the operators did not do it properly. According to our plans, by 2020 almost 40% of Italian homes will be reached by the public network.”

Meanwhile, war wages on between Vivendi and Italian regulator CONSOB to provide evidence that the French firm does not control TIM, and TIM itself is stuck in an ongoing broadband scandal with the Italian government. Vivendi stated in a letter recently that its “participation in the telco is not sufficient enough to allow it to exercise, on a stable basis, a dominant influence at Telecom Italia shareholders’ meetings.”