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Universal Music Fire Scandal Is ‘Just Noise,’ Says Vivendi’s Arnaud de Puyfontaine

UPDATED: Backing up comments made yesterday by Yannick Bolloré, CEO of Havas and chairman of Vivendi, Universal Music Group’s corporate parent, Vivendi CEO and chairman of the management board Arnaud de Puyfontaine tells Variety the sale of 50% of the world’s largest music company is moving along as planned and that the recent controversy surrounding a massive 2008 fire, in which an estimated 500,000 master recordings from the company’s vast archive were destroyed, is simply “noise.”

“It’s a credit to the leadership of [UMG chairman] Lucian Grainge,” said de Puyfontaine, who complimented the music industry veteran’s handling of the situation. “It happened 11 years ago and [last week’s] headlines are just noise.”

In a New York Times expose published on June 11, the 2008 fire was described as “the biggest disaster in the history of the music business.” In turn, UMG issued a statement disputing the characterization of the damage it caused to the company’s archives, saying the article contains “numerous inaccuracies, misleading statements, contradictions and fundamental misunderstandings of the scope of the incident and affected assets.”

In response to de Puyfontaine’s comments, attorney Howard King, who represents a number of artists he says plan to bring legal action against UMG over the losses they suffered in the fire, said: “The likelihood that their life’s works may have been destroyed by the gross negligence of Universal Music is far  from ‘just noise’ to any potentially affected artist. It wasn’t ‘just noise’ in 2009 when Universal Music sued NBC Universal, claiming that hundreds of thousands of irreplaceable masters had been lost in the devastating fire. It wasn’t ‘just noise’ when Universal Music collected tens of millions of dollars, or more, in compensation for the lost masters. I believe that Mr de Puyfontaine wishes this would all disappear and not interfere with his financial planning. This wish will not come true.”

UMG is by far the world’s largest music company, with recorded-music, publishing, merchandise, management and other divisions and a sprawling roster that includes Taylor Swift, Drake, Lady Gaga, Kanye West, Kacey Musgraves and many other superstar artists.

Speaking to Bloomberg at the Cannes Lions International Festival of Creativity on June 19, Bolloré projected that discussion with potential buyers will wind down by the end of the year, noting that Vivendi is not looking to spin off UMG and is in no hurry to wrap the sale.

Said Bolloré: “The supervisory board of Vivendi is working with the [UMG] management board to find the [right] financial partner. As you may know, the music industry is going through huge growth and the business is thriving, and we want to make sure we can accelerate the growth in the coming years so we have communicated that we want to open the process before the end of 2019 and the management is still very confident the process is on track.”

Sources contend that private equity investors have been losing interest due to the high price of the company — which one UMG insider placed at $40 billion — and the slow pace of the deal, leading Vivendi to enter talks with other companies, including Chinese giant Tencent, which has been among the reported interested parties for several months.

Where do the discussions stand? A source tells Variety that earlier this year Tencent and the investment group KKR did team up to make a bid for half of UMG and that talks with Vivendi had advanced, but the discussions stopped. The insider posits that Bolloré isn’t really looking to sell, but rather, to get a sense of how much it’s worth.

But Bolloré doubled down on the notion that all is well, telling Bloomberg, “Everything’s fine — trust me.”

During a press rendez-vous held in Cannes on Thursday morning, the Havas Group head announced a new strategic direction and mission for the Vivendi-owned agency. Said Bolloré (pictured below): “Now the right time for us to set ourselves a new ambition: make a meaningful difference to brands, businesses and people. The primary focus of everyone at Havas is to create meaningful brands because meaningful brands are better for business and for the world we live in.”

Yannick Bollore
CREDIT: JOHN MILLAR

The standing-room-only talk focused on the role of entertainment in everyday life, citing that research from a proprietary study shows that 83% of people find entertainment to be a “vital need” but also warning that trust in brands is waning. “On trust, there is clearly an issue,” said Bolloré. “The majority of the people believe that trust is becoming a rare value.” This is particularly evident for those in the Gen Z age bracket, he added, “and this is a problem.”

To that end, Havas is stepping up its presence in the greater marketing economy, announcing further development of the Annex, Havas-Vivendi’s shared network designed to help brands tap into digital and millennial culture, the acquisition of Los Angeles’ Battery agency, which will provide a presence on the west coast, in close proximity to UMG’s headquarters, and the launch of Annex Bastille, its first outpost in France.

As part of its plan to better the company’s position on gender parity and inclusion, Bolloré said he hopes the company’s current female senior corporate staffing of 44% will rise to more than 50% by 2024. “We believe we should reach this number [as] it is very important to us.”

Also mentioned was a more concerted effort to work within the greater Vivendi ecosystem, bringing the company’s assets, which include Canal+ Group, Gameloft, Editis and Dailymotion, in addition to UMG, into a more collaborative fold. As Havas chief insights officer Maria Garrido explained, companies spent 62 billion dollars on content marketing last year. She cited Havas as being “uniquely positioned to lead the paradigm shift into the content marketing space,” but first Vivendi’s different entities “have to get to know each other.”

To facilitate the company’s “togetherness” ethos, a new “One Vivendi” intranet platform was created. Said Garrido: “[So] all of our different organizations can get to know their colleagues and their brothers and sisters within the Vivendi group and get a much better understanding as to what Gameloft does, what Universal Music does, what Havas does. Those entities are sharing best cases around the network on how they can start working together to build new and creative forms of content for all of our clients around the world.”

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