Canal_PlusFrench publisher Lagardere has begun the process of selling its 20% share of the pay-TV group Canal Plus now that talks with 80% owner Vivendi have broken down. Vivendi was not going to pay the €1.4 billion ($1.8 billion) Lagardere wanted. Analysts I’ve spoken say that the IPO threat by Lagardere  threat could be a way of forcing Vivendi back to the table.

But it also could backfire. Juliano Hiroshi Torii, media analyst at Societe Generale, tells me Vivendi could just wait a couple of years and buy back the 20% for less than the €1 billion it’s already offered. Analysts say that in current market conditions, combined with the need to offer potential investors a discount, Lagardere is unlikely to get more than that if it goes down the IP0 route. Lagardere hopes potential investors will be tempted by thinking they can turn the stake in a couple of years’ time. Hiroshi Torii says, “It’s an ineffective threat because Vivendi is not in any hurry to buy.”

Lagardere publishes magazines Elle and Paris Match and runs TV and radio stations. Its move to seek a sale has been widely expected since the group has long said it wanted to exit Canal Plus. Analysts say Lagardere trades at a 15-20% discount as investors punish it for owning minority stakes outside its core magazine and book publishing business.

Vivendi has been buying up other minority stakes and may not want Lagardere’s 20% getting away. Vivendi bought M6’s 5.1% stake in the pay-TV group back at the beginning of 2010 for €384 million. Previously, it had TF1’s bought 9.9% share back for €744 million.

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