French media group Vivendi has formed a strategic partnership with Mediaset, a leading provider of free and pay television in Italy and Spain. The partnership aims to develop joint production and distribution initiatives and create a global over-the-top television delivery platform.

Vivendi includes the Canal+ Group, the leading pay-television operator in France. Its operations include Studiocanal, a producer and distributor of film and television series. Vivendi also has a majority stake in Dailymotion, the online video sharing web site.

Mediaset is the largest commercial broadcaster in Italy. It was founded in the 1970s by the former Italian prime minister Silvio Berlusconi. His family holding company Fininvest still has a controlling stake in the business. Mediaset Premium is a pay television service launched on digital terrestrial television in 2005.

Under the terms of the agreement, 3.5% of Vivendi’s share capital will be exchanged for 3.5% of Mediaset’s share capital and 100% of the share capital of the Mediaset Premium pay-television company.

Mediaset Premium will become part of the Vivendi group, as part of an international pay-television network.

The alliance aims to establish a major European player in production, adopting standards and language aligned with the global market and enhanced by distribution through the television networks of the two groups in Italy, France and Spain.

It also aims to establish a pan-European on-demand streaming platform, merging the online properties of the two groups in Italy, France, Spain and Germany, with expansion planned into other countries. The new platform will also be to distribute dedicated original productions.

The transaction is expected to close in the coming months, subject to regulatory approval.

Vivendi has 11.24 million pay-television subscribers, as reported in the informitv Multiscreen Index.

Vivendi says that the addition of Mediaset Premium will increase its subscriber base to over 13 million. It says the deal “represents a major step forward for Vivendi in its ambition to become a large international media and content group with a European essence.”

In its results announcement for 2015, Vivendi said the six Canal+ channels have been losing money in France for the last four years. It said new national and international players had resulted in increase in the cost of sports and drama broadcasting rights, leading to greater losses. Vivendi said that it could not continue to finance the losses of Canal+ channels in France.