Vivendi has fired back against the recent indictment of CEO Arnaud de Puyfontaine and former chairman Vincent Bolloré (whose namesake company still possesses the single largest stake and voting share in Vivendi) on media-manipulation charges in Italy, signaling that the execs have their “full support.”
Universal Music Group majority owner Vivendi issued a more than 650-word-long response to the indictments. In brief, these charges stemmed from a planned 2016 share-swap deal that would have seen Vivendi trade north of $1 billion in stock for the entirety of Mediaset Premium, a digital television and pay-per-view provider in Italy, as well as a 3.5 percent interest in the overarching mass media company, Mediaset.
Vivendi backed out of the arrangement after more closely examining Mediaset Premium’s financials, however, and moved shortly thereafter to acquire an over 28 percent share in Mediaset itself. Billionaire former Italian Prime Minister Silvio Berlusconi founded Mediaset in 1987 and remains its largest stakeholder via his Fininvest holding company. (Fininvest’s stake is about 44 percent, to Vivendi’s aforementioned approximately 28 percent stake.)
Following the initial purchase agreement’s collapse, Fininvest submitted a nearly $700 million lawsuit against Vivendi to a Milan court. The complaint centered specifically on an alleged “decrease in the value of Mediaset shares deriving from this event,” as well as the larger implications given that Vivendi moved quickly to acquire Mediaset stock. Worth noting here is that Vivendi also owns roughly 24 percent of Telecom Italia.
On the indictment front, Italian prosecutors allege that Vivendi’s CEO and former chairman violated regulatory and investment-disclosure laws established by the Italian Companies and Exchange Commission (CONSOB). In its statement, Vivendi pushed back against the claim, describing the events that preceded the Mediaset investment and relaying that “all the acquisitions were reported in a timely and transparent manner.”
Additionally, the French conglomerate notes that Italy’s Authority for Communications Guarantees (AGCOM) in April of 2017 moved “to apply for the first time a provision of the Gasparri Law,” a 2004 broadcast-reform law concerning ownership in multiple media companies, to Vivendi’s shares in both Mediaset and Telecom Italia. The EU’s European Court of Justice ruled in favor of Vivendi back in September of this year.
“The Italian authorities have been seeking to circumvent the European Court of Justice judgment through the enactment of an emergency measure that is supposed to introduce retroactively the new restrictions on Vivendi’s shareholder rights,” continues the UMG owner’s message. “Vivendi has been left with no other choice than to lodge a complaint to the European Commission.”
And after elaborating upon the circumstances of this alleged effort to deny Vivendi’s Mediaset voting rights, the release concludes: “Vivendi will continue to take all the necessary measures, including criminal complaints, to protect its legitimate interests as well as those of its current and former executives.”
Following Warner Music Group’s successful return to the stock market earlier this year, Vivendi announced in late October that it intends to take Universal Music Group public sometime in 2022. Before then, though, Chinese conglomerate Tencent will have the opportunity to double its 10 percent UMG stake for an additional $3.3 billion. The entity is reportedly planning to do so, but the transaction must be initiated by January 15th, 2021.
Here’s Vivendi’s full response to the media-manipulation charges against its CEO and its largest stakeholder:
Following the rumors in the Italian press regarding the conclusion of the investigation by the Milan prosecutors in the “Vivendi-Mediaset” affair (which was prompted by a complaint by Mr. Silvio Berlusconi’s holding company Fininvest), Vivendi SA (Paris:VIV) is shocked that a confidential document, intended for the protection of the individuals under investigation, was made public as soon as it was notified to their attorneys, also misrepresenting its contents.
The timing of this leak improperly influences the course of ongoing judicial disputes between private parties and tarnishes the image of the individuals concerned, to whom Vivendi will continue to provide its full support.
The prosecutors hypothesize that, in the second half of 2016, Vivendi communicated incorrect information to the market and did not disclose certain information to the Italian securities regulator.
With respect to these allegations, Vivendi reaffirms that it has acquired its stake in Mediaset in compliance with all applicable laws, that it has always communicated transparently to the market and the regulators and that its current and former executives are either extraneous to those allegations or have acted in full compliance of the law. Therefore, their attorneys have already expressed full willingness to provide the necessary clarifications before the Prosecutor’s office takes a decision, being confident that the decision will be the closure of the proceedings without charges.
Since 2016, Vivendi has continuously defended its interests, backed with several favorable court decisions in different jurisdictions and tried to find an acceptable settlement in its commercial dispute with Mediaset.
On April 8th, 2016, Vivendi concluded a strategic and industrial partnership with Mediaset. The envisaged Mediaset Premium acquisition unfortunately led to a commercial lawsuit and Vivendi’s efforts to find an amicable solution to the dispute were finally scuppered by Mediaset’s ill-fated attempt to obtain the seizure of 3.5% of Vivendi’s share capital in October 2016.
As it believed at that time that the strategic interest of this partnership was greater than the stakes of the lawsuit, Vivendi started acquiring Mediaset shares in November 2016 and crossed the 3% threshold of the Mediaset share capital in early December, and by the end of December 2016 acquired a position of 28.80% of the share capital. All the acquisitions were reported in a timely and transparent manner.
In April of 2017, the Italian Communication Authority (AGCom), further to a complaint by Mediaset, decided to apply for the first time a provision of the Gasparri Law regarding the protection of media pluralism, claiming that Vivendi’s minority stakes in both Telecom Italia and Mediaset contravened this law. As a result, Vivendi has been obliged to put in trust two-thirds of its Mediaset shares. The European Court of Justice ruled in September 2020 in favor of Vivendi and concluded that the Gasparri Law was incompatible with the freedom of establishment under European Union law.
As the judgment of the Rome administrative court on the AGcom decision is now imminent, the Italian authorities have been seeking to circumvent the European Court of Justice judgment through the enactment of an emergency measure that is supposed to introduce retroactively the new restrictions on Vivendi’s shareholder rights. For this reason, after having asked unsuccessfully the Italian authorities to avoid a new blatant infringement of EU law, Vivendi has been left with no other choice than to lodge a complaint to the European Commission.
In the meantime, Mediaset relied on the AGCOM decision to prevent Vivendi from voting all its shares at several of its Shareholders’ Meetings, in particular to create MediaForEurope, a Dutch company resulting from the merger between Mediaset Italy and Mediaset Spain and whose by-laws contained among other things, several anti-Vivendi provisions and an exorbitant multiple voting system. Vivendi was thus forced to challenge the merger and its objections were vindicated by the Spanish and Dutch courts.
Vivendi will continue to take all the necessary measures, including criminal complaints, to protect its legitimate interests as well as those of its current and former executives.