By Elvira Pollina
SANTA MARGHERITA, Italy (Reuters) - Italian broadcaster Mediaset (MI:MS) kept its door open on Wednesday to a possible merger with German equity partner ProSiebenSat.1 Media (DE:PSMGn) but said the Italian group's plan to create a pan-European media alliance took priority.
Mediaset Chief Executive Pier Silvio Berlusconi told reporters his priority was to finalise the company's recently unveiled plan to use a new Dutch holding company, MediaforEurope (MFE) as a platform to develop the pan-European alliance.
Mediaset and other traditional European broadcasters are looking for ways to respond to growing competition from Netflix (O:NFLX) in the region, where the U.S. streaming service is proving especially popular with younger viewers.
Mediaset already owns 9.6% of ProSiebenSat.1 and is counting on the German broadcaster and other prospective partners to join forces through MFE to use a common technology platform to provide streaming services across Europe.
Asked whether Mediaset wanted to strengthen its alliance with ProSiebenSat.1 in particular, either by taking more equity in the German business or carrying out a full merger, Berlusconi declined to rule out either option in the longer term.
"We're beginning by finalising the birth of MediaforEurope, so one step at a time. ProSiebensat likes us but there are other possibilities in Europe," he said in the coastal town of Santa Margherita where Mediaset unveiled its new programming schedule.
ProSiebenSat.1 declined to comment.
Berlusconi also cited French broadcaster Television Francais 1 SA (TF1) (PA:TFFP) as another potential partner for MFE but added: "There's nothing concrete."
A source familiar with the matter said Portuguese broadcaster Media Capital, a unit of Spanish media group Prisa (MC:PRS), had expressed early interest in an alliance with MFE.
Media Capital had no immediate comment.
VIVENDI KEEPS MEDIASET GUESSING
Under Mediaset's plan announced last month, MFE will start by housing the assets of both the Italian media group and those of its Madrid-listed unit, Mediaset Espana (MC:TL5), with the Dutch holding company carrying out a reverse takeover of both.
Mediaset is controlled by the family of ex-prime minister Silvio Berlusconi which will end up with voting rights of just above 50 percent in MFE after the restructuring.
However, Mediaset has a hostile shareholder in French media group Vivendi (PA:VIV), which currently owns 28.8% of Mediaset and has its own rival plan to build a European empire.
Vivendi has not indicated whether it will swap its Mediaset shares for a stake in MFE but moved this week to challenge the Berlusconi family's tightening grip on Mediaset by calling for an extraordinary shareholder meeting.
Vivendi wants to use the meeting to scrap Mediaset's recently adopted loyalty share scheme, under which investors will have two voting rights for each share held for at least 24 straight months.
Asked if Vivendi could cash out its Mediaset stake in the MFE restructuring, given that the cash alternative to the share offer is restricted, Chief Executive Berlusconi said he was confident other investors would take up Vivendi's shares.
"We're convinced, given the validity of the project, that if Vivendi were to withdraw there would be other interested investors," he said.
Vivendi could be excluded from voting at shareholder meetings to approve the new MFE holding company, according to a bylaw of the new holding.