Topper Fourtou's plan would retain core assets

This article was updated at 6:00 pm PST

PARIS — Vivendi Universal’s new chairman-CEO Jean-Rene Fourtou wants to unload a handful of Canal Plus assets but hang on to its valuable TV channels and, perhaps, to StudioCanal.

Canal Plus’ 40% stake in film production and distribution company UGC, as well as Canal Plus Technologies, Canal Numedia and Canal Plus channels in Spain, Poland and Belgium are on the block.

Remaining businesses could be bundled into a new public company with Viv U retaining a controlling stake.

Restructuring plans are in early stages, but Viv U apparently intends to stay in the media and entertainment biz. Insiders at Universal Studios and Universal Music have been waiting for signals regarding the parent company’s ultimate direction.

The sale of assets must be approved by Viv U’s strategy committee and the board of Canal Plus. Fourtou also needs a greenlight from France’s Conseil Superieur de l’Audiovisuel and may have to apply for a new broadcasting license for a restructured Canal Plus.

Vivendi would keep its 49% stake in the new, slimmed-down Canal Plus, the maximum it can hold under French law. The rest of the shares will be put on the market and could raise as much as $2 billion — enough to get Viv U’s stock out of the junk bond category.

Eric Licoys, vice president of Canal Plus’ supervisory board, will reportedly run the new operation, assisted by Jean-Laurent Nabet, Canal Plus’ present managing director. The present Canal Group topper, Xavier Couture, will be responsible for the day-to-day operations of the channels.

Fourtou’s decision is thought to have been prompted by French media group Lagardere’s withdrawal of its interest in buying the entire Canal group because of Canal’s x4.5 billion ($4.5 billion) debt. Other potential buyers — broadcasters TF1 and M6 and film production and distribution entity Pathe — were only interested in Canal Plus’ French TV operations.

According to a recent audit, Canal Plus lost $700 million in 2001 and will lose $800 million in 2002.

Of Canal Plus’ foreign feevee assets, its 21% stake in Spanish pay TV leader Sogecable is by far the most valuable. But sources at Sogecable denied a sale is in the works. “The Canal Plus group and (Sogecable parent) Prisa have a shareholders agreement to maintain their stakes in Sogecable until December 2003,” a Sogecable spokesman told Daily Variety.

If Canal Plus breaks that pact, Prisa, which is the Sogecable managing shareholder with its 21% stake, can exercise a first option to buy Canal Plus’ stake. Prisa would consider that option or assess the possibility of passing the stake to an allied company.

It is uncertain whether Studio Canal, Canal’s TV and film production arm, will be one of the assets sold. A sale to foreign investors would no doubt infuriate the French production community.

Producer Alain Goldman refused to comment on the eventual sale of StudioCanal, which owns 50% of Goldman’s Legende Enterprises.

Meanwhile, Rupert Murdoch has said he will buy Canal Plus’ Italian operation Telepiu, which has been operating at a loss of $400 million annually, for $1.3 billion, as opposed to the $1.5 billion originally agreed upon in June.

(John Hopewell in Madrid contributed to this report.)

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