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Mediaset: Vivendi letter confirms validity of contract

The Vivendi office is seen in Paris on Wednesday, May 17, 2006.Mediaset has claimed that a letter received from Vivendi formally calling time on the interim management agreement between the pair implicitly recognises the validity of the April 8 contract struck by the French and Italian companies whereby Vivendi would have taken control of Mediaset Premium.

The Italian broadcaster said that the October 18 letter officially notifying it of the end of the management deal was a belated attempt to prevent further damage to the pay TV business, which it said had been paralysed as a result of the uncertainty hanging over its fate.

Mediaset has already filed a law-suit claiming damages of €50 million for every month starting from July 25, the date that Vivendi said publicly it did not intend to honour the contract on the grounds that an analysis of Mediaset Premium’s accounts carried out after the deal had uncovered new information about the company’s prospects.

Mediaset’s owner Fininvest also sued Vivendi in a separate action for €570 million, which it said represented the decline in the value of Mediaset’s shares since the deal fell apart amid bitter public acrimony between the two former partners.

According to Mediaset, Vivendi’s latest letter represents an admission of the validity of the April contract as it only communicated the termination of one of its component parts – article 5.1 – covering the interim management of the company.

The latest twist in the saga follows a statement by Vivendi that it was abandoning any attempt to find an amicable solution to the conflict.

Vivendi’s decision followed a legal move by Mediaset last week calling for the seizure of 3.5% of Vivendi’s stock. This is the stake in Vivendi that Mediaset says it was promised in exchange for an equal stake in Mediaset allocated to Vivendi as part of the same agreement that would have seen the French media giant take over Premium.