More Speculation On Vivendi’s Future

While U.S. senators were hearing about the pros and cons of EMI’s recorded music business being sold to Universal, the latter’s parent company became subject to further media speculation regarding its future.

Analysts have been talking about the Paris-based media and electronics giant making structural changes since April, when Vivendi told its shareholders that discussions about splitting the company or selling off assets were no longer “taboo.”

The speculation was likely fuelled by a Vivendi statement from June 25, which said the company wouldn’t comment on the previous weekend’s two-day meeting with its supervisory and management boards.

“The outcomes of the meeting are not to be revealed publicly,” it said. “Vivendi will communicate on it plans and the necessary evolution of the group as and when appropriate.”

The Financial Times said the meeting was “like the G8 of Vivendi,” although it also said “there will not be white smoke” at the end of it.

The problem occupying the boards and the heads of Vivendi’s major subsidiaries – Universal Music, troubled French mobile phone operator SFR, Pay-TV group Canal Plus and video game publisher Activision Blizzard – is that, as a group – Vivendi is “much less than the sum of its parts,” the FT says.

What’s bothering shareholders is that the stock’s worth euro 14.1 ($17.6), 25 percent down on where it was 12 months ago.

Bernstein Research analyst Claudio Aspesi reckons that a full breakup of the company – splitting the telecoms and entertainment divisions – could more than double the value of Vivendi shares.

The SFR telecoms business has been in trouble since it paid, or arguably overpaid, euro 7.8 billion ($9.7 billion) to buy out Vodafone’s 44 percent stake in the company, only to be swamped by the number of new and cheaper competitors flooding the market.

It’s also difficult to asses the value of the entertainment division while Universal is still wrangling with U.S. and European regulators over its $1.9 billion purchase of EMI’s records business.

Vivendi is confident of getting approval for the deal in both markets, although with the concessions it will likely be required to make, the final shape of the business is hard to gauge.

Meanwhile, back in New York, the comments that Universal chairman and chief exec Lucian Grainge prepared for a Senate Judiciary anti-trust sub-committee’s investigation into the deal June 21 didn’t say anything about possible disposals or behavioural concessions.

Many UK analysts have speculated that the most likely entertainment asset to be shed would be Activision Blizzard, valued at around $12 billion but, at nearly six times what Universal will pay for EMI, it’s difficult to see who the potential buyers could be.