Vivendi to Sell Stake in EchoStar at a Loss

Continuing its retreat from the global media arena, Vivendi Universal on Wednesday said it would sell back its 10% stake in satellite TV company EchoStar Communications Corp. for $1.07 billion.

The sale, set to close Monday, is about $430 million less than what the French conglomerate paid for the stake in January during aggressive U.S. media expansion led by former Chief Executive Jean-Marie Messier that also netted Universal’s movie studio, theme parks and music labels.

Vivendi had believed the EchoStar purchase would help build U.S. distribution for its television shows and films.

But that backfired when investors rejected the company’s overall strategy, sending Vivendi’s stock tumbling 70% this year and forcing the ouster of Messier.

For its part, Littleton, Colo.-based EchoStar intended to use the cash to help fund its proposed merger with DirecTV parent, El Segundo-based Hughes Electronics Corp. But EchoStar scrapped those plans last week amid regulatory hurdles.

Vivendi is shedding its stake in EchoStar as part of CEO Jean-Rene Fourtou’s plan to sell about $16 billion in assets through next year and lower Vivendi’s huge debts. Other sales this year have included Boston publisher Houghton-Mifflin and European pay TV operations. Vivendi also is selling its remaining 40% stake in its water utility business.

In other developments Wednesday, Vivendi disclosed that it was taking legal action against a minority shareholder group whose complaints about alleged accounting irregularities have triggered a criminal probe into the company.

Vivendi said the French shareholders’ group, APPAC, made false statements about Vivendi after a police raid at the company’s Paris headquarters last week.

Those comments, Vivendi said in a statement, included false claims that the company was about to be declared insolvent and had filed at least seven different balance sheets.

“Vivendi Universal considers it has a duty to take legal action in the interests of shareholders and employees, who should not be victims of biased information,” the company said.

APPAC filed a complaint in July alleging that Vivendi had issued false statements about its finances. The complaint prompted a criminal probe that has triggered searches of homes owned by Messier and other former executives. Four investigations are underway in France and the U.S. in connection with Vivendi’s financial disclosures.