French conglomerate Vivendi has entered into a strategic partnership with Italian media company Mediaset, with the aim of taking on the likes of Netflix and Sky in the OTT and premium video markets.

The partnership is underpinned by an equity swap with each company owning 3.5% of each other and Vivendi wholly acquiring the Mediaset Premium pay TV division, which competes directly with Sky Italia in premium sports and movies. Mediaset, which is controlled by former Italian PM Silvio Berlusconi, is also a major Italian terrestrial TV player and has significant terrestrial TV operations in Spain.

The two companies have agreed to develop an industrial partnership at international level to, on one hand, jointly develop various initiatives for the production and distribution of ambitious audiovisual content and, on the other, to create a global over-the-top (OTT) television delivery platform,” said a Vivendi statement. It also noted that Vivendi is making significant investments in content production via its Studiocanal division and has recently launched Studio+, which produces exclusive premium series created specifically for mobile devices, available through a dedicated app.

“The deal between Vivendi and Mediaset is a potential game changer,” said Paolo Pescatore, of CCS Insight. “Vivendi is therefore now positioning itself as a content powerhouse in Europe. Sky’s move to consolidate its position in Europe has arguably triggered this move as the media industry continues to see a wave of corporate activity. Similarly, pay TV providers have come under significant competitive pressure with the arrival of OTT providers like Netflix and telcos adding TV/video services as part of a multiplay offer.”

The move comes just days after Telecom Italia replaced its CEO with, it is assumed, one that was more aligned with major shareholder Vivendi’s multiplay plans. The underlying trend is for telecoms and media companies to merge in order to offer comprehensive multiplay bundles and that seems to be Vivendi’s plan for TIM.