Vivendi hopes to make Mediaset new pay-TV offer next week - source

By Mathieu Rosemain and Giulia Segreti

PARIS/MILAN (Reuters) - Vivendi (VIV.PA) hopes to make a new offer for Mediaset's (MS.MI) pay-TV business by the end of next week to try to end a dispute between the French and Italian media groups that erupted in July, a source close to matter said.

Under the preferred scenario Vivendi is working on, shares of Mediaset Premium would be divided evenly between Vivendi, Mediaset and a third party, which would most likely be an investment fund, the source said on Friday.

Another possibility would be for Mediaset and Vivendi to get 40 percent of Premium each with the third party getting the other 20 percent.

Vivendi declined to comment.

"Several funds have come up," the source told Reuters.

"With interest rates at such low levels, finding a willing investor is not the hardest thing here," the source said, adding that rebuilding trust with Mediaset was the biggest challenge.

In April, the two companies signed an agreement that would have given Vivendi full control of Mediaset's Premium pay-TV division. The deal included a cross-shareholding agreement giving each company a 3.5 percent stake in the other.

But in July, Vivendi, led by billionaire Vincent Bollore, said it only wanted a 20 per cent stake in Premium and planned to buy some 15 per cent of Mediaset over three years.

The French media company, which has vowed to turn itself into a European media powerhouse, said its change of heart reflected differences with Mediaset over the analysis of Premium's financial forecasts.

Mediaset will discuss the disputed deal at a board meeting on Tuesday, a second source familiar with the matter said.

"The board was already scheduled, it's not an extraordinary board meeting called for the issue, but certainly the Vivendi matter will be discussed," the second source said.

The Italian company, controlled by former prime minister Silvio Berlusconi, is suing Vivendi for not following through on the April agreement and estimates damages could come to more than 1.5 billion euros (1 billion pounds) should it collapse.

"Since July there have been no direct contacts with Vivendi," the source said, asking not to be named.

A third source close to the matter said while advisers were looking into ways to mediate between the two sides, there was no sign of a possible compromise for the time being.

Vivendi, keen to create a pan-European media and content conglomerate to compete with Rupert Murdoch's Sky (SKYB.L) and video-streaming giant Netflix (NFLX.O), is the biggest shareholder of Italian phone company Telecom Italia (TLIT.MI).

(additional reporting by Stephen Jewkes; editing by Matthias Blamont and David Clarke)