Gauls galled at board as conglom opts for U sale
PARIS — Vivendi Universal has abandoned “illusory” French dreams of conquering Hollywood, chairman Jean-Rene Fourtou said Tuesday, declaring publicly for the first time that Vivendi Universal Entertainment will be sold this year.
His comments, during a raucous and highly emotional annual shareholder’s meeting in Paris, indicate the sale process is well under way. Bids are said to be due in late May to early June with a sale later in the summer.
Vivendi is soliciting offers for all of VUE, which includes film, TV, theme parks and games. Fourtou was clearly still conflicted about whether to sell Universal Music.
Sans showbiz, the Gallic group will focus on its telecom biz led by Cegetel and on loss-making French pay TV outfit Canal Plus. Vivendi is hoping Canal will turn an operating profit by year end for the first time in seven years.
The meeting prompted angry outbursts from shareholders, who have seen the value of their Viv U holdings plunge 80% over the past two years. Board member and former Seagram CEO Edgar Bronfman Jr. — sitting in the front row of the meeting — was attacked several times and one shareholder called for his resignation from the board, amid criticism of an alleged $110 million he had received in consulting fees from Viv U.
Bronfman stoically stood up and, his voice hoarse from a bout of laryngitis, acknowledged that the company had been “the subject of irresponsible management for a period of time” but said he had been key in persuading the board to dump former CEO Jean-Marie Messier.
“I certainly did not approve of nor endorse Mr. Messier’s style, but when it became evident it was an issue of substance rather than style I initiated the action to remove Mr. Messier.”
Fourtou applauded Bronfman’s “loyalty” for staying on the board. “I’m glad he’s here to help with the American problems,” he said.
In one of many barbed comments, a stockholder asked another board member if he had slept through meetings during the Messier era.
Fourtou was also lambasted by several shareholders who accused him of hiding the truth about the company’s books. After one outburst, the Viv U chief said he would sue the speaker for defamation.
Fourtou as surgeon
“It’s like after an accident,” Fourtou said, attempting to explain his part in the conglom’s difficulties. “I am the surgeon who is treating the victim — but I wasn’t the one driving.”
The Viv U chief said he had bought nearly 194,000 shares for x11 apiece.
But the insults kept coming. “You’ve all got dirty hands,” another shareholder interjected. “Board membership is just one big game of musical chairs.”
Recriminations came thick and fast about money received by Messier after his ouster last year. Fourtou insisted, “I refused to pay him anything.” He added that Viv U had taken measures to recover salary payments that continued to be made after July, plus three months of rent, for more than $90,000 that Messier still owed the company for the Park Avenue apartment he used to live in.
“Fortunately, we no longer have to deal with Messier,” Fourtou said.
Messier ran up Vivendi’s debt in a series of fast-paced acquisitions and was pushed out in July as the company teetered on the brink of bankruptcy. Fourtou has sold billion of dollars worth of assets but also added additional debt through the purchase of Cegetel.
VUE sale a priority
Fourtou said a VUE sale is “a major priority in 2003” and that he’s “negotiating with several possible parties for cash or cash and shares in a bigger more competitive entity.”
Oil billionaire and former 20th Century Fox owner Marvin Davis and a consortium of investors has bid something less than $20 billion for VUE and Universal Music.
But with the global music biz in the midst of a pronounced slump, “selling music today would amount to selling lower than the value (of the unit),” Fourtou said, noting that “no definite decision has been made.” Also, Vivendi’s selling all the assets so soon after buying them from Seagram would trigger a massive tax payment to the IRS.
Fourtou denied speculation that Apple had bid for U Music.
Besides Davis, MGM, Viacom, NBC parent General Electric and Liberty Media (with or without Barry Diller) are said to be interested in VUE. Cable nets USA and Sci Fi are considered the most valuable assets in the VUE family.
“Our studios are of particularly good quality. But do you think us French can make movies for an American market? … Or single-handedly become a leader in American television?” Fourtou asked, poking fun at the huge ambitions of Messier.
Selling VUE would solve Vivendi’s cash crunch. Fourtou suggested the company might cash in some of its U.S. entertainment industry chips for a bigger slice of the North African telco Maroc Telecom. “Having decided to pull out of Los Angeles, which is a huge asset, I am proposing to stay in Maroc Telecom and even become the majority shareholder,” he said.
Viv U shareholders in France and the U.S. have filed lawsuits accusing the Gallic conglom and its board of glossing over the catastrophic state of its finances during and after Messier. Regulators and prosecutors on both sides of the Atlantic are investigating the state of Vivendi’s finances and who knew what when.
Vivendi shares closed up 0.44% to $15.99 Tuesday. They were above $30 a year ago — and nearly at $80 two years ago.