UPDATE 1-Mediaset, Vivendi in talks to resolve row over TV project - sources

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MILAN, Nov 5 (Reuters) - Italian broadcaster Mediaset and its hostile shareholder Vivendi are in talks about ways to overcome a dispute over the governance of Mediaset’s planned pan-European TV reorganisation, two sources close to the matter said on Tuesday.

Should the two sides reach a deal, it would mark the first thaw in a long-running legal fight between the broadcaster owned by the family of former Prime Minister Silvio Berlusconi and the French media group led by billionaire Vincent Bollore.

The reorganisation by Italy’s top commercial broadcaster aims to create a new holding company, called MediaforEurope, to pursue pan-European tie-ups and meet rising competition in the industry as growth stalls in Mediaset’s domestic market.

Vivendi, Mediaset’s second largest shareholder, is challenging the plan in courts as it includes a governance structure that would help Fininvest, the Berlusconi family’s holding company, tighten its grip over the broadcaster.

A Milan court had been scheduled to rule on Vivendi’s request to freeze the reorganisation this week but has postponed its decision to Nov. 22 to give the two sides time to reach an agreement, Mediaset said in a statement.

Vivendi declined to comment.

Vivendi has been a hostile Mediaset investor since the two companies fell out in 2016 over an aborted pay-TV deal. They have been in a legal war since then.

Vivendi owns 29% of Mediaset but had to transfer two-thirds of that holding to an arms-length trust which Mediaset has prevented from voting at shareholder meetings.

Reporting by Alfredo Faieta and Elvira Pollina; Writing by Silvia Aloisi; Editing by Edmund Blair