03/09/2003

A large-scale reorganisation is underway at the French entertainment colossus Vivendi Universal. Yesterday, the group handed over its majority share in the capital of the UGC group to the Verrechia family, and it has also decided to begin the process of merging its American activities with NBC, the General Electric company. These two decisions are part of the strategy of debt reduction, started a year ago by VU’s boss, Jean-René Fourtou.

It’s the start of a new era for Vivendi Universal’s operations in the United States, with the creation of a new media giant, provisionally called "NBC Universal". Vivendi will hold a 20% stake in this new entity until at least 2006, and it will receive payments of $3.25b. The agreement is expected to be finalised by the end of the month.

VU also intends to reduce it’s controlling stake in UGC, the European exhibition giant, which also works in the production and distribution sectors. Vivendi Universal had been the majority shareholder of UGC, with a 53.3% stake, since October 2002, but it now intends to reduce this to 40%. The other shares will be passed on to the Verrechia family, which runs VU and also controls the board of management. The operation is extremely complex on a technical and financial level and it has to be approved by the French ministers of Finance and Culture.
This general overview is a continuation of VU’s strategy aimed at reducing the debts run up during Jean-Marie Messier’s period of management. Jean-René Fourtou has stressed that a hole of Euro 5b in the company’s finances will be filled by 2004. The big shake-up will reduce the French group’s presence in its home market. The pay TV company Canal+ and Cegetel are now seen to be the two elements of the company that are most at risk in the further dismantling of the former giant.

(Translated from French)