Jean-Bernard Levy falls out with board

LONDON — Vivendi chief exec Jean-Bernard Levy is set to step down after a disagreement with the board of the French media and telco conglom over strategy. Jean-Francois Dubos, Vivendi’s general counsel, will replace Levy as CEO, the French group announced late Thursday in Paris after a board meeting.

Opening the door to Vivendi’s spinning or even selling off business units, Levy’s departure comes after he was widely criticized for paying a pricey €7.8 billion ($9.7 billion) to buy Vodafone’s 44% stake in SFR, Vivendi’s profit-driving French telco.

Vivendi’s share price, down 25% to over the last year, has been hit by the battering SFR has suffered from rival telco Illiad’s launch of a low-cost Free Mobile service.

Vivendi lost 274,000 French cellphone clients in the first three months of 2012. Vivendi’s adjusted net profits fell 13% to €823 million ($1.0 billion) January-March.

The immediate cause for Levy’s departure, however, was his resisting calls from shareholders and investors to break up Vivendi, which boasts an eclectic mix of the Universal Music Group, gaming unit Activision Blizzard, pay TV company Canal Plus Group and telco operations in France, Morocco and Brazil.

Levy, Vivendi chairman Jean-Rene Fourtou, who replaced Jean-Marie Messier, and senior management met last weekend for a June summit where Levy and Fourtou reportedly clashed over Vivendi’s future.

“It has never been clear what the added value Vivendi gives to its component companies,” said Francois Godard at London-based Enders Analysis.

“When life is good, nobody questions a company’s structure. When there are problems, that question comes to the surface,” Godard said.

Ratings agency Fitch has threatened Vivendi with credit ratings devaluation if it deleverages. There seems little immediate consensus, however, about how that could be achieved.

Levy’s comes just days after a Manhattan federal court Monday fined Vivendi $950 million for its 2002 purchase of USA Networks from Liberty Media, a buy put through with Vivendi’s shares, which rapidly lost value under Messier.

Vivendi chief operating officer from 2002 and CEO from 2005, Levy is widely accredited with helping to turn around Vivendi’s fortunes after an ultimately disastrous spending spree by Messier.

Dubos’ appointment is temporary until a permanent successor is found.

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