Vivendi ponders split after NBC deal

THE French market today begins calculating the remaining break-up value of telecoms-to-entertainment conglomerate Vivendi Universal after its landmark deal to sell most of its US entertainment businesses to American TV network NBC.

Vivendi executive chairman Jean-Rene Fourtou said he was now contemplating splitting the remaining parts of Vivendi in two. 'We will have two groups, a telecoms group and an entertainment group,' he said. 'Should they stay together or not?'

The biggest block to a break-up appears to be that it could close the door on using up tax losses built up as a result of the e35bn of losses declared by Vivendi over the past two years as a result of asset write-downs.

Fourtou said he would give himself 'some months' to decide on a break-up after reaching outline accord yesterday to merge Vivendi's US cinema and cable television interests, Vivendi Universal Entertainment, with General Electric-backed NBC.

Under the deal, Vivendi will retain 20% of the merged entertainment giant until at least 2006, but receive some $3.2bn (£2.04bn) and transfer $1.6bn of debt to NBC. Minority shareholders in Vivendi Universal Entertainment, including tycoon Barry Diller, will receive some $600m in total.

The cash inflow, combined with further asset sales totalling e3.5bn (£2.4bn) to e4bn, will slash Vivendi's debt from e13bn on 30 June to less than e5bn by the year end.

In little more than a year since being hired to rescue the media giant after the acrimonious ousting of creator Jean-Marie Messier, Fourtou has slashed Vivendi's debts and stabilised its assets.

These include a controlling stake in French fixed-line phone group Cegetel, which controls the second-largest French mobile operator SFR, and a clutch of ill-assorted, media assets, including Universal Music Group, Vivendi Universal Games and the Canal-plus TV chain in France.

Yesterday, the Vivendi board agreed to increase Vivendi's interest in MarocTelecom to a controlling 51% stake, and recommended the sale of its interest in Polish mobile phones operator PTC to Deutsche Telekom.