France's Vivendi, Italy's Mediaset clinch deal in challenge to Netflix

France's media firm Vivendi (LSE: 0IIF.L - news) and Italy's Mediaset (LSE: 0NE1.L - news) said Friday they had clinched a deal as part of the French group's strategy to build a European media giant to rival US streaming powerhouse Netflix (Xetra: 552484 - news) .

The partnership will see the companies swap 3.5 percent stakes in a "strategic alliance" aimed at "capturing new opportunities across the international competitive landscape," Mediaset said in a statement.

Vivendi will take complete ownership of Mediaset Premium, the Italian company's loss-making pay TV arm.

"The agreement will foster the creation and distribution of new international contents by leveraging on the production strengths and cultural affinities of Italy, Spain and France," it said.

The deal ends months of speculation over a tie-up between Vivendi and Italy's biggest commercial broadcaster, controlled by Italy?s former prime minister, billionaire Silvio Berlusconi.

Mediaset said the aim was to create "the first pan-European on-demand streaming content platform," bringing together the online properties of the two groups in Italy, France, Spain and Germany to offer a wide ranger of films and TV series.

"The aim of the new platform will also be to distribute dedicated original productions. The new project also forecasts expansion in countries where the two companies are not currently present," it said.

Mediaset's vice president Pier Silvio Berlusconi told journalists the deal did not mean the Berlusconi family was on its way out of the media sector: "on the contrary, I can say with great conviction we want to invest and develop. This is a first step towards opening up to Europe".

By snapping up Mediaset Premium, Vivendi is expanding a global pay TV network already established in France, Poland, Africa, Central America and the Far East (Kuala Lumpur: 5029.KL - news) , the company said.

According to Italian press reports, the French group also has it sights on Italian production company Cattleya, which has turned out the hit crime thriller television series "Romanzo Criminale" and "Gomorrah".

Would-be media giants are faced with a rapidly evolving scene with global video contents on the up, the emergence of International OTT players ("over-the-top content", the delivery of media directly over the Internet) and the increasingly transnational structure of pay TV players.

News (Other OTC: NWSAL - news) of the deal followed Vivendi's announcement this week that it is launching Studio Plus, a production label dedicated to international series in multiple languages for mobile screens, from smartphones to tablets (Other OTC: UBGXF - news) .