Vivendi Not Planning 'Straight Break-Up' of Media, Telecom Businesses

Vivendi-logo - H 2012

The entertainment and telecom company is keeping all other options open as it evaluates possible divestitures.

LONDON - Vivendi management said Thursday that it is in no rush as it evaluates possible asset sales, but emphasized that a straight-forward break-up of its media/entertainment and telecom businesses is not in the cards.

"We are reviewing all options," CFO Philippe Capron told an earnings press conference. But he then emphasized that "a straight break-up is not" something being contemplated for now. After all, ensuring value for debt holders is important, and there is "very great difficulty" in apportioning debt between entities, he explained.

Initially, there were different interpretations of the comments as some people took them to mean Vivendi wouldn't sell all its businesses individually, while others took them to mean there would be no separation into a media/entertainment and a telecom company. One of Capron's comments signaled though that he was talking about separating the media and telecom assets held by the companies as he at one stage cited difficulties about apportioning debt "between the two different entities."

He later confirmed that by saying that splitting the company into a telecom and a media group "doesn't work," because telecom firms often support higher amounts of debt.

Vivendi owns such media/entertainment assets as Universal Music Group, a majority stake in video game company Activision Blizzard, French pay TV firm Canal+ and telecom companies in France, Morocco and Brazil.

Management didn't comment specifically on the likelihood of a sale of Vivendi's stake in Activision Blizzard, which some have previously called one potential outcome, or of othe businesses the company owns.

Vivendi CEO Jean-Francois Dubos on Thursday also signaled his team was in no rush to decide on possible divestitures. "We will go at our own pace," he said.

Industry observers have been hoping for deal news since Jean-Bernard Levy left as CEO earlier this summer. He had opposed a break-up of Vivendi or major asset sales.

Capron commented on the intense interest in Vivendi's dealmaking plans Thursday, saying "I see no analysts, only investment bankers."

Vivendi recently put the chairman of French pay TV firm Canal+, Bertrand Meheut, in charge of evaluating its media/content asset strategy, which fueled speculation that a split could be in the works. "We want to do more than we do today," the company said Thursday about its media assets without detailing what the outcome of the review could be or when it could conclude.

UBS analyst Polo Tang said after the company's latest earnings release that a lack of more detailed guidance on asset sales plans "may be seen as disappointing" by investors. 

But Sanford C. Bernstein analyst Claudio Aspesi said that the company's results were better than expected, providing "some breathing space" for management. "The lack of incremental bad news is likely to mean that pressure to monetize the assets is lessened in the near-term, giving management breathing space to determine strategy and potentially seek out a better price for any future asset disposal," he said.


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