Vivendi Plans Clearance

Vivendi is already in talks to sell off $666 million worth of EMI’s records business assets in the hope of swaying European regulators into allowing its purchase of the whole company.

The Paris-based parent of Universal Music Group, which has guaranteed a $1.9 billion offer for EMI’s recorded music business, broke the news after the company’s annual earnings conference March 1.

“We want to get this done by the time regulators give their verdict on the Universal Music and EMI transaction,” Vivendi chief financial officer Philippe Capron explained.

It could be a tight call, as Vivendi chief exec Jean-Bernard Levy says he expects the European Commission will rule on the deal in the second half of the year.

The EC says the initial deadline for a ruling is March 23, a date on which most analysts expect the EC will say it needs a longer look at it.

Apart from wanting to appease EC regulators, Vivendi would also like to have its hands on the $666 million it expects the sale to raise.

It would be a handy contribution toward the $1.9 billion it’s guaranteed to pay U.S. bank Citigroup to get hold of EMI – whether it gets regulatory clearance or not.

Apart from that, Vivendi is expecting Universal – the world’s biggest music company – to make euro 50 million ($65.9 million) worth of cost savings in 2012.

Last year UMG saw revenues fall by 5.7 percent to $5.5 billion, although earnings were up 7.6 percent to $385 million.
Although Vivendi announced record-breaking profits of $3.9 billion, the French media, entertainment and telecoms giant’s shares fell by 9.4 percent to euro 14.30 ($18.9).

Apart from what may turn out to be a long regulatory fight over its purchase of EMI’s record business, it seems the company doesn’t expect to make much money in the next couple of years.

The profit slump forecast is down to its telecoms businesses, SFR and Maroc, facing tough competition in a discount-driven market.

Both companies reported earnings for the last quarter of 2011 down between 20 percent and 25 percent on the previous year.

Even Activision Blizzard, whose “World Of Warcraft” games helped deliver about one-third ($1.32 billion) of Vivendi’s 2011 profits, has announced it’s shedding 600 jobs in 2012.