Vivendi Universal chief executive Jean-Rene Fourtou yesterday announced that he had approval from the corporation's board for a Euros 4bn bid to take over mobile phones group Cegetel. He also revealed that he is not committed to the group staying in the entertainment business.
Vivendi Universal currently owns entertainment properties including Universal Studios, Universal Music, Focus Features, Canal Plus, StudioCanal and a major chunk of UGC. But he said that "it would not be logical" to hold onto both Cegetel and Vivendi Universal's entertainment interests.
He did not say what kind of outfit he would eventually like the group to become - at a press conference yesterday he described Vivendi Universal as "a banking company with an enormous debt-reduction programme," - but sources suggest that he has a two year timeframe in which to make his decision.
Despite the Cegetel move increasing Vivendi's debts back up to Euros 16.1bn, Fourtou was able to persuade the board to outbid Vodafone for the 26% Cegetel stake, as Cegetel is more profitable than the entire US entertainment assets and has no significant debts.
Fourtou said that the next priority will be to sort out the US entertainment businesses. This could mean cost cutting, outright disposal or a partial flotation. "The figures [for Vivendi Universal Entertainment (VUE)] appear glorious but there is a lot of work to be done," he said, and noted that cost reduction programmes are set for Los Angeles in the near future along with a more "focused manner" of management.
What becomes of VUE clearly lies in the hands of former Fox chief Barry Diller. "We have a gentlemen's agreement. I asked him if he would be CEO (in the interim) of VUE, so that I could delegate the monitoring of the US account as a whole," said Fourtou. He said the current situation is likely to last until summer 2003.
Yesterday too, US billionaire Marvin Davis re-confirmed a $15bn bid for VUE that would additionally remove $5bn of debt from Vivendi Universal's balance sheet. Fourtou said it would be examined. "We will evaluate all possibilities," said Fourtou. "This open minded approach may destabilise our team but it is in the interest of our shareholders that we expand Universal's businesses. An external partner could enrich our entertainment assets where needed...especially in television."
In an aside, Fourtou revealed that recently sketched plans to float a re-configured Canal Plus on the Paris stockmarket is now only one of several possibilities. Other options include a new type of relationship with the Lagardere group or a merger with rival French pay-TV group TPS. "It has been proven in Europe that two pay-TVs can not exist in the same country," he said.
No explanation was given for the resignations of three Vivendi Universal board members: Marc Vienot, honorary chairman of Societe Generale and ally of former Vivendi chief Jean-Marie Messier; Jacques Friedmann, a former Axa executive, and Accord boss Jean-Marc Espalioux.