Vivendi’s Italian Pay-TV Unit to Acquire Rival

Telepiu, the unprofitable Italian pay-television unit of Vivendi Universal, may acquire control of its only rival, money-losing Stream, sources familiar with the companies said.

Vivendi, Europe’s biggest media company, may announce the agreement as soon as today, the sources said. Merging Telepiu with Stream, which is owned by News Corp. and Telecom Italia, would help them cut costs. If they don’t, one may go out of business, analysts said.

Italian regulators said they are prepared to approve the transaction. The companies would probably win passage from the European Union by contending they can’t survive separately. Telepiu has 1.4 million subscribers and Stream has half that. Together they’re worth $2.9 billion, analysts said.

“The regulators will let it pass because neither company is making money,” said Jacques Falzon, an analyst with KBC Securities, who recommends clients “accumulate” Vivendi Universal shares. “If they don’t, one of the two will be forced out of business.”

Sylvie Ruggieri, a spokeswoman at Vivendi’s pay-TV unit Canal Plus, Alison Clark, a spokeswoman for Rupert Murdoch’s News International in London and Daniela Bracco, a Telecom Italia spokeswoman, all declined to comment.

Vivendi Chief Executive Jean-Marie Messier has been putting pressure on the company’s pay-TV unit to cut costs since buying Canal Plus, Europe’s biggest pay-TV operator, last year. Combining the two Italian companies would help them negotiate for rights to broadcast European soccer matches and reduce other expenses, analysts said.

Vivendi Universal’s American depositary receipts Monday fell $1.21 to $66.10.