For Jean-Rene Fourtou, the chief executive of Vivendi Universal, deciding which businesses to sell to stave off a cash crisis could prove the easy part. More difficult, according to analysts and company insiders, is figuring out which to keep.
Fourtou, who last week won some breathing room from creditors by announcing a plan to sell US$9.8 billion worth of properties, mainly publishing and media businesses in the US, is now trying to map out a strategy to take the company forward.
At the heart of that decision is whether to remain a media conglomerate with global aspirations, or return Vivendi to its French roots with a few key businesses in telecommunications, pay-TV and waste management.
A decision is not expected until the board meets in September, and Fourtou has so far given no indication that he has made up his mind. But people taking part in Vivendi's discussions have said in recent days that they see signs that Vivendi is leaning toward the French solution.
A spokeswoman for Vivendi declined to comment on the company's plans.
But in an indication of how far reaching the potential overhaul may be, Fourtou is said to be examining several options for selling or forming new partnerships involving its vast American entertainment divisions, including Universal Studios and the USA Cable networks, both acquired from Barry Diller.
Scenarios include spinning off the group, known as Vivendi Universal Entertainment and still run by Diller, to shareholders through an initial public offering; selling some assets piecemeal, or keeping them all in-house.
The possible sale of these divisions would be motivated less by Vivendi's financial concerns than by a revised strategic plan. Those taking part in the discussions said Vivendi does not need to sell its American entertainment operations to help it manage its US$18.6 billion in debt.
That is especially true now that Vivendi has earmarked several other units for sale in the next nine months, including the publisher Houghton Mifflin, a stake in satellite provider EchoStar Communications, and Telepiu, an Italian pay-television company. In total, these sales should raise about US$4.9 billion.
Any further sales would therefore be an admission that the strategy put together by Jean-Marie Messier, the former chief executive ousted in June, is no longer viable. Messier transformed the company from a stodgy utility into a global media concern. But his aggressive acquisitions saddled the company with debt and appeared, to many investors, to lack a strategic justification.
Fourtou's willingness to consider the sale of these operations is driven in part by the eagerness of possible buyers. Several have expressed an interest, including Liberty Media, controlled by the Denver cable magnate John C. Malone; Viacom, which owns MTV and Nickelodeon, and NBC, part of the General Electric Co, a person involved in Vivendi's discussions said. He added, however, that no talks are currently under way.
Company spokesmen all declined to comment.
Liberty Media, which owns both Discovery Network and the Starz cable network, is exploring an arrangement where it would merge these operations with Vivendi Universal Entertainment, which owns USA Networks, the Sci-Fi Channel, the Universal Pictures film studio and Universal's television studio, the persons involved in Vivendi's discussions said.
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