Viv U, GE deal will close in early Oct.
Conglom saves Diller dealings for after inking
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Vivendi Universal will postpone its multibillion-dollar scrap with Barry Diller until after it's signed a formal deal to sell U to General Electric in the next few weeks, execs at the French conglom said Wednesday.
That pact should be announced in early October, according to Viv U chairman-CEO Jean-Rene Fourtou, although the deal won't close until the second quarter of 2004. When the ink is dry, the conglom will start negotiating to cut its complex ties with Diller and his company, InterActiveCorp, which owns about 5% of Vivendi Universal Entertainment. Settling up is solely Vivendi's responsibility, and Fourtou indicated that he expects Diller will cooperate.
"We both agree that our common wish is to undo these earlier deals," he said during a press conference in Paris to discuss the company's first-half financial results.
Overall losses shrank. Canal Plus is waging a full-blown recovery. U Pictures was robust, TV less so. Music and games were the weakest links.
Diller "will be seeking to protect his interests; we'll be seeking to protect ours. If we don't find an accord, it doesn't matter. It won't stop us doing the deal," Viv U chief financial officer Jacques Espinasse told Daily Variety later.
Company noted that Viv U owns 56 million shares of InterActiveCorp, 11% of the company, worth about e2 billion ($2.3 billion).
The GE deal, unveiled Sept. 2 and considered a coup for the giant U.S. company, still leaves Viv U's future direction unclear since the conglom remains an ungainly mix of telecom and entertainment assets.
Synergy in status quo
Fourtou noted that "reflection isn't over yet" on Viv U's strategy. "There's a real financial and fiscal synergy in staying as we are," he said. Fourtou also hinted for the first time that he may stay on as Viv U topper beyond the end of 2004 deadline that he announced when he took over from ousted chairman Jean-Marie Messier last year.
"I've left the question open," he said. "I'm less categorical than I was."
Vivendi narrowed its loss to $723 million from $14 billion in the first sixth months of last year.
Operating income and cash flow jumped, driven by Cegetel and a turnaround at Canal Plus.
VUE was hit by a weak dollar, but Vivendi said Universal Pictures' operating income surged 60% in the first half excluding a currency shift and other adjustments. The conglom cited the homevid success of "The Bourne Identity" and "8 Mile" and box office perfs of "Bruce Almighty" and "2 Fast 2 Furious."
Original costs hit TV unit
At Universal Television, operating income fell 7% due to higher costs from investing in original programming.
Universal Music, hit by an industrywide slump in sales and Internet piracy, swung to a loss of $48 million. Revenue fell 25% to $2.5. Conglom warned that U Music will suffer additional pains from its plan to slash CD prices in the fourth quarter.
VU Games lost about $60 million.
Vivendi is selling Universal Games to NBC but it's keeping its music division.
A reinvigorated Canal Plus Group swung to an operating profit of $281 million. As a reward for the pay TV unit's restructuring efforts, Viv U announced it would recapitalize the indebted division to the tune of $3.4 billion.
Vivendi had slashed net debt to about $15.7 billion by the end of June from $40 billion the previous year -- despite forking out more than $4 billion for Cegetel in January.
