MILAN (Reuters) - Shares in Mediaset (>> Mediaset) rose more than 5 percent on Tuesday after a Bloomberg report said French media group Vivendi (>> Vivendi) was considering making a cash and stock offer to settle its pay-TV dispute with the Italian broadcaster.

Bloomberg said in a source-based report that Vivendi was considering giving Mediaset a compensation package that may be valued around 1 billion euros (893.62 million pounds).

The report also added that Mediaset's Premium pay-TV unit could become part of a joint venture that is being set up between Vivendi's own pay-TV arm Canal+ and Italian phone group Telecom Italia (>> Telecom Italia). Vivendi is the biggest shareholder in Telecom Italia with a 24 percent stake.

Mediaset shares were up 3 percent by 1455 GMT, while Telecom Italia stock was down 1.3 percent.

(Reporting by Valentina Za, writing by Agnieszka Flak)

Stocks treated in this article : Vivendi, Telecom Italia, Mediaset