Can you hear me now?
Vivendi Universal Chief Executive Jean-Rene Fourtou, under pressure from shareholders to articulate a corporate strategy, said explicitly for the first time Tuesday that the French conglomerate would bid adieu to Hollywood and focus on becoming a telecommunications giant.
He said the exit would be complete by 2004.
“It would be an illusion to think we can manage and develop” the Los Angeles-based entertainment operations from Paris, Fourtou said during the company’s annual meeting in the French capital.
Fourtou’s remarks apparently were aimed at soothing investor concern about the company’s future course. For months, media investors and executives have speculated about how the former water utility would emerge from its star-crossed acquisition of Universal’s entertainment assets.
Though it has been widely reported that Vivendi was likely to sell off its entertainment properties, Fourtou himself has been coy, saying publicly that he was weighing all his options.
On Tuesday, though, the CEO was unequivocal. He said Vivendi plans this year to unload its Universal movie studio, theme parks and cable channels. Prospective buyers include Liberty Media Corp., Metro-Goldwyn-Mayer Inc., General Electric Co.'s NBC and an investment group headed by Marvin Davis. Vivendi said it also would sell its growing U.S.-based video games unit.
In all, the entertainment assets Fourtou is putting on the block are worth an estimated $12 billion. Selling the assets would significantly reduce Vivendi’s debt of $18 billion.
By 2004, Fourtou said, the company with a 150-year lineage would be left with its remaining French assets: phone service provider Cegetel, the most profitable of Vivendi’s divisions, and pay-TV operator Canal Plus. The company also would increase its 35% stake in Morocco Telecom as part of a new push into telecom, Fourtou said.
Still uncertain is the fate of Universal Music Group, the world’s largest music company. Company executives are said to be encouraged by that division’s growing market share and believe the problem of rampant piracy can be controlled.
Earlier this year, Vivendi executives hinted strongly that they would try to retain control of the music operation.
But that scenario was called into question with reports that Apple Computer Inc. has been in talks to buy all or part of the music group. Fourtou, in his first face-to-face meeting with shareholders, said Tuesday that no offer has been made for Universal Music.
“Selling Universal Music today would be tantamount to relinquishing a valuable position,” Fourtou said. “But keeping it can also be a risk.”
Shedding the bulk of Universal’s entertainment businesses would close the book on the failed ambitions of former CEO Jean-Marie Messier, who bought the operations from Canada’s Bronfman family as part of a $34-billion merger in December 2000, creating one of the world’s largest media conglomerates.
Although the shareholder meeting was not as raucous as last year’s gathering, Fourtou and his fellow directors, including Edgar Bronfman Jr., faced questions from shareholders still fuming over Messier’s legacy.
“When Mr. Messier took over the company, everybody was delighted,” complained one shareholder.
“Very few directors stopped him from his overweening ambitions.”
Vivendi Universal shares climbed 7 cents to $15.90 on the New York Stock Exchange.