Posted on 03/05/2003 10:27:38 PM PST by Pro-Bush
PARIS - A year after Vivendi's complex financial structure first began to show cracks, the cash-strapped media conglomerate is set to consider selling its vast entertainment empire.
The company's board will meet Thursday to discuss selling its U.S. television and film businesses, which include the world's biggest music company, Universal Music Group, the Universal film studio and theme parks, as well and the USA and Sci-Fi cable networks.
Such a sale, which would help pay off Vivendi's multibillion-dollar debt, could turn out to be one of the largest entertainment auctions in years.
"I don't see that Vivendi has any other option" than to sell off those assets to cut its debt, said Nicola Stewart, WestLB Panmure analyst in London. "They have nothing else to sell."
The France-based conglomerate barely staved off bankruptcy last year as it struggled to cope with roughly $21 billion of debt, a collapsing share price, boardroom infighting and no clear strategy.
Chairman Jean-Marie Messier was ousted in July, and a new team led by Jean-Rene Fourtou began pursuing a fire sale of assets that included the company's publishing unit, Internet venture and even art works.
But under Fourtou's restructuring plan, Vivendi needs to sell another $7.7 billion in assets this year before he believes the company can return to solid footing.
Vivendi spokesman Antoine Lefort declined to comment on Thursday's meeting, after which the company is scheduled to report its fourth-quarter earnings.
But most analysts believe the board of directors has three basic options at this point: a block sale, an initial public offering or a partial asset disposal.
And time appears to be running out.
Former oil tycoon Marvin Davis has threatened to withdraw his $20 billion bid for all the entertainment assets unless Vivendi agrees to exclusive talks with him. Davis has been annoyed with the slow pace of negotiations and Vivendi's efforts to court other bidders for all or part of the entertainment assets.
According to a recent report in the Financial Times of London, Vivendi's directors want to keep the cash generating music division, at least for another couple of years.
But Davis appears to be interested in acquiring all the entertainment assets, not various pieces, and could decide to withdraw his offer if the music group is not for sale. People close to him have indicated Thursday's board meeting could be key in determining whether his offer remains on the table.
Viacom Inc., the U.S. entertainment company; General Electric Co.'s NBC; and Metro-Goldwyn-Mayer have emerged as contenders, notably for Vivendi's television and film businesses.
Another uncertainty involves Barry Diller, the U.S. media entrepreneur who in 2001 folded his USA Networks and film units into Vivendi's studio and theme park assets in a $10.3 billion deal to form Vivendi Universal Entertainment. Universal Music Group is not part of VUE.
Diller's USA Interactive, which runs a variety of Internet businesses and the Home Shopping Network, already owns or controls nearly 7 percent of VUE and could launch a bid. But so far, Diller has been ambivalent about his intentions.
Of the three options open to Vivendi's board, an initial public offering is the least likely, said Stewart.
"They will have problems to do an IPO, market conditions are not in their favor," she said.
Vivendi "will either sell to Marvin Davis or try to break up the assets," Stewart said, adding that Viacom has the strongest balance sheet to pursue any acquisitions.
But she doubts whether the board meeting on Thursday will be the final say on the future of Vivendi's entertainment businesses.
"It's still too early," she said.
comme il faut
Just another reason to hate the French.
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