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Weak wind for sale

Viv U narrows its losses, but music takes beating

NEW YORK — Vivendi Universal said Wednesday its net losses narrowed last quarter — but without much help from the U.S. entertainment assets it’s about to sell.

Universal Music, theme parks, television and even Viv U’s usually robust games division saw revenue slip and profits erode, due in part to exchange-rate fluctuations. TV programming costs jumped, and U Pictures released fewer films in the first quarter. (Since then, the studio’s had a string of box office hits.)

Vivendi lost e319 million ($376 million) compared with $20 billion for the previous year on a giant accounting charge. Excluding the charge, the conglom lost $960 million the year before. Operating income jumped 39% to $994 million.

The French conglom credited advances at Cegetel, Maroc Telecom and Canal Plus, and it said the upbeat numbers came “despite temporary declines” in Vivendi Universal Entertainment, games and music.

While the figures are dated — they run through March and it’s already June — they’re certainly not an ideal advertisement for the showbiz assets as bidders put the finishing touches on offers, due Monday.

Media off

“Our takeaway is that telecom was good, media wasn’t,” Sanford Bernstein analyst Michael Nathanson said.

Music in particular took a nasty hit: Revenue fell 19% — or 9% on a constant currency basis — to $1.3 billion. The unit swung to a loss of $33 million from a profit of $32 million the year before.

At Vivendi Universal Entertainment, pro forma revenue fell 22% to $1.6 billion, and operating income dropped 23% to $251 million. Adjusting for exchange rates, the VUE numbers were down 5% and 6%, respectively.

Viv U said Universal Pictures and parks each had revenue fall 9%, while TV revenue was up 5% on constant currency basis. It didn’t break out profit/loss. But the conglom attributed VUE’s overall dip to higher original programming costs in TV and fewer film releases at the studio.

‘Hulk’ on tap

The latter should reverse itself after a string of high-grossing pics in the current quarter. “The Hulk” opens Friday.

Pay TV group Canal Plus appeared to reach operating breakeven last quarter and expects to post an operating profit this year.

As the auction for VUE draws to a close, Viv U chief financial officer Jacques Espinasse told analysts at a meeting in Paris Wednesday the conglom is in contact with six potential bidders.

“Bids will be collected on June 23. We are not wasting any time and proceeding speedily,” he said, adding, “Some investors are interested in the whole thing, including music, and some are only interested in VUE or part of VUE. Some are interested only in games.”

Espinasse insisted once again that “VU is not handicapped in its ability to sell its VUE assets, and potential buyers will be able to operate them without interference.”

And he reiterated that Vivendi is considering an initial public offering for VUE in a “dual-track process” in case it doesn’t like the offers. Most Wall Streeters and industry players consider an IPO highly unlikely.

Vivendi said its debt at the end of May was about $16.5 billion.

After a recent runup ahead of the proposed sale, Viv U shares fell 3.3% Wednesday to close at $19.95.

(Alison James in Paris contributed to this story.)

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