Vivendi Universal gave a rather reluctant thumbs up to showbiz Wednesday as chairman Jean-Rene Fourtou warned its Hollywood studio to work more closely with its French parent, focus on profits and cut the fat.
Viv U is “an entertainment and media group — like it or not,” Fourtou told reporters during a press conference in Paris after a hotly anticipated board meeting.
Directors approved an accelerated schedule of asset sales — €12 billion ($11.7 billion) worth in 18 months, with publishing as the only core biz put on the block for now. Fourtou hinted Viv U may unload its 40% stake in Vivendi Environment but promised not to sell shares on the open market.
Self-deprecating and tough-talking by turns, Fourtou joked, “I went to the U.S., and they thought I was totally cute and amusing and devoid of credibility in an industry I know nothing about.” But, he added more seriously, “There’s not all that much testing of ideas with our American friends,” considering the “big budgets” involved.
“People in the game business have no other interest in their life. Vivendi Universal Entertainment has a bit of the same problem. So what’s the key if we want to turn this into a success — the key to forming a partnership?” he asked.
He said he wants to put guidelines in place so shareholders won’t be “blindsided by people who are more attentive to their own income than they are to other things. It’s better to have their income be geared to shareholders.”
Still, he noted, “Los Angeles has never been so productive as it is now,” Fourtou said.
In fact, corporate jitters have hardly affected the performance of U Pictures.
After a low-key summer, the much-bruited fall releases “Red Dragon” and Eminem starrer “8 Miles” could help carry the 2002 slate to a healthy year-end domestic cume of $900 million.
Fourtou acknowledged that market volatility and a slump in advertising means media and entertainment holdings wouldn’t fetch appropriate prices.
And a sale of Universal Music before 2005 would entail a hefty tax bill in Canada.
Fourtou has been turning for advice to Edgar Bronfman Jr., whom he called “very subtle and intelligent;” He said he’d offered the former Seagram topper a part-time salaried position but not whether Bronfman had accepted, though it seems not.
He indicated the Bronfmans weren’t thrilled by a decision to move Viv U’s New York offices from the historic Seagram building to cheaper digs on Third Avenue.
5 directors out
Bronfman was a key player in the ouster of former chairman Jean-Marie Messier, helping to orchestrate a board coup in late June. The latter remains on the board, but Viv U announced Wednesday that five directors are stepping down, including both friends and foes of Messier.
They are Spanish businesswoman Esther Koplowitz; EDS chairman Richard Brown; former Messier No. 2 Eric Licoys; Claridges chairman Samuel Minzberg, who represented the interests of Charles Bronfman; Simon Murray & Co. chairman Simon Murray; and Alcatel chairman Serge Tchuruk.
Fourtou said that other directors may step down in coming months.
Fernando Falco y Fernandez was elected as a non-executive member, bringing the board to what Viv U called a “more streamlined” 12 members.
Reducing the size of boards has been one goal of the recent push to address corporate governance issues. Walt Disney reduced the size of its board earlier this week.
Viv U’s first priority will be the mammoth sale of $11.7 billion in assets over the next two years, Fourtou said, ranging from the $4.9 billion VUP publishing division to stakes in a constellation of “exotic” non-core businesses acquired during Messier’s chaotic reign as topper.
Fourtou announced the sale of the money-losing Italian satellite platform Telepiu and Canal Plus Technologies. He hedged on the future of Viv U’s stake in Gallic telco Cegetel.
He described Universal and Canal Plus as “two strong brands” and said that with its remaining U.S. and French media assets, the group will still be “first or second in Europe and third or fourth in the world.”
“Our credibility today to manage all of this is zero, I know,” the former pharmaceuticals chief said with an ironic smile. He compared himself to one of the “Magnificent Seven” in his endeavor to bring Viv U back from the brink.
The hour-and-a-half-long press conference at Viv U headquarters just off the Arc de Triomphe was conducted almost exclusively in French and without the satellite linkup with the U.S. and bilingual presentation slides typical of Viv U meets in the Messier era. No top-level U.S. execs were present.
Sitting in the front row were Viv U Publishing topper Agnes Touraine, Universal Music France topper Pascal Negre and the Canal Plus Group topper Xavier Couture.
“It’s an extremely efficacious team, you are going to find out,” Fourtou said. He kicked off the conference with a colorful blow-by-blow description of how the conglom came within a whisker of bankruptcy this summer, “a crisis as unexpected as it was violent.”
“When Moody’s called within two hours of my arrival, I thought this must be a setup,” Fourtou recounted. He blames Moody’s as much or more than Messier for Viv U’s financial crisis.
Having successfully pleaded with banks and obtained a $2.9 billion credit line earlier this month, he said Viv U’s “liquidity crisis is practically behind us.”
While tackling debt is the conglom’s immediate priority, Fourtou said that its core businesses will need to be trimmed, and headquarters restructured, citing the example of Viv U’s 60-strong communications department.
“For people in this building it is a shock, it’s painful. We’ll take time about it,” he said.
In France, “Saving Canal Plus was and remains one of the principal objectives of the group,” Fourtou said.
Viv U’s battered shares rose 2.59% Wednesday to $12.30.