Vivendi, home to Hollywood's Universal Studios and a global music empire, prepared to install a "safe pair of hands" to take over the group at a board meeting yesterday, following talks to secure short-term financing after its debt ratings were slashed.
In crisis over the cost of its bid to combine global media, communications and environmental services under one roof, Vivendi might have to strip down and focus on a core business following an autopsy of what went wrong at the sprawling French conglomerate.
Vivendi directors were to convene late yesterday to name a new chairman to replace Jean-Marie Messier, who resigned Tuesday in the face of shareholder and boardroom dissatisfaction with the group's mounting debt and staggering losses.
PHOTO: AP
In charting a fresh strategy, the new leadership at Vivendi will doubtless be forced to take a hard look at what happened to Messier's bold bid to marry content -- music, films, news, games -- with the means of distribution -- telephones, television, computers.
Messier's last, most audacious move just seven months ago was a strike into Hollywood's home territory with the acquisition of the cable television operation USA Networks, giving Vivendi a big role in the distribution of films, television programes and music.
While a decision to dismantle the current Vivendi empire may be inevitable in order to reduce overall debt of 33 to 34 billion euros (US$32.4 to US$33.4 billion), company directors will be under pressure to avoid selling assets in a depressed market.
But in the short-term, Vivendi Universal could divest itself of its loss-making Internet units, notably the Vizzavi portal it launched in June 2000 with British telecoms operator Vodafone.
Despite investment since then of a whopping one billion euros, the enterprise has yet to turn a profit.
Vivendi Universal's overall Internet activities last year had sales of 129 million euros and an operating loss of 290 million euros.
The pay-TV network Canal Plus, which ran up losses of 374 million euros last year, offers Vivendi Univeral another means of slimming down. Several groups have already expressed interest in the operation, namely privately held French television station TF1 as well as media groups Pathe and Lagardere.
Messier in December 2000 added both Canal Plus and the Canadian drinks and media company Seagram to his water and utilities venture Vivendi Environnement to form Vivendi Universal.
While not all analysts are convinced a breakup is inevitable, Messier's conviction that the future belongs to companies controlling every segment of the media chain -- from progamming to distribution -- seems certain to come under sharp scrutiny following the collapse of so many Internet ventures.
"It is stupefying to realize that two years after the dot.com bubble burst, the Internet activities at Vivendi Universal continue to destroy several hundreds of millions of euros every year," financial analysts at Credit Lyonnais Securities wrote in March.
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