Sale of Vivendi’s U.S. Assets Seen

Vivendi Universal’s Hollywood executives returned from their first face-to-face meetings with the new chairman in Paris with one clear impression: The French want to be out of the American entertainment business as badly as the Americans want them to leave.

Chairman Jean-Rene Fourtou did not specifically say he planned to sell the American companies, sources close to the discussions said. But he left little doubt that Vivendi does not plan to be a long-term parent company to Universal Studios or Universal Music.

Exactly how and when Vivendi plans to spin off the studio and music company, and whether they would be a single company or two entities, are subjects of speculation. Sources close to the discussions in Paris said the French executives did not discuss specifics with the American executives.

Stressing that the meetings were collegial and cooperative, the sources said board members are sorting through their options before declaring a new strategy for the company.

Vivendi stock has fallen 70% this year amid investor concern over the company’s enormous debt load and incoherent strategy. Fourtou was brought in this month to replace Chairman Jean-Marie Messier, whose vision of transforming the French water and sewer company into a global media giant was rapidly sinking the company.

The meetings Monday were to bring Fourtou up to date on Vivendi’s Hollywood operations. The Americans also attended meetings with Vivendi’s bankers.

On Wednesday, Fourtou said Vivendi plans further major asset sales beyond the announced disposal of certain money-losing divisions of French pay-television company Canal Plus. He did not say what he plans to put on the auction block. The likely candidates include Houghton-Mifflin publishing company and Vivendi’s 44% stake in French telecom operator Cegetel, sources close to the board said.

Fourtou also said he expects next month to secure an additional bank loan, estimated at $2 billion to $3 billion, to ease the company’s cash crunch.

“Vivendi Universal is carrying too much debt,” Fourtou said. “Lowering the debt burden will require significant asset disposals. However, we do not intend to rush into any actions.”

Even so, a frenzy of speculation surrounds who would buy Universal Studios.

Off-the-cuff remarks by NBC Chief Executive Robert Wright that his company might be interested in buying or merging with the studio created a furor at a meeting Wednesday of television journalists in Pasadena. Network sources later said Wright’s comments were exaggerated.

Separately Wednesday, Vivendi Universal Entertainment Chairman Barry Diller, a key executive at the Paris meetings, expressed his support for Fourtou.

Fourtou is “straight, direct [and] has one goal in mind, which is to stabilize the company financially,” said Diller, who spoke to reporters after his other company, USA Interactive Inc., released its second-quarter earnings report.

Diller’s online commerce company reported improved cash flow and revenue, primarily because of the strength of its travel operations and online dating services. Its shares gained $2.28, or about 13%, to $20.44 on Nasdaq.

Vivendi’s shares rallied after the announcement, closing at $16.15, up 85 cents, on the New York Stock Exchange.

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Times staff writer Claudia Eller contributed to this report.