Vivendi may break up Canal Plus

Fourtou: Preparing a strategy to sell Vivendi assets and cut debt

PARIS, France -- Vivendi Universal may break up Canal Plus rather than sell its French pay-television unit as one business, according to a report, which could delay plans to raise cash to pay off the group's huge debt.

Canal Plus shares fell after the newspaper Le Figaro said on Monday that the group's new Chief Executive Jean-Rene Fourtou planned to sell Canal's film production and distribution assets, as well as some international operations.

However, the paper said Fourtou wants to hold onto Canal's profitable French channels.

Last week, there was speculation that all of Canal -- Europe's largest pay-TV operator -- would be sold to TF1 after the French terrestrial broadcaster recently purchased satellite company TPS, signalling more consolidation in the country's TV industry.

Analysts said the sale of Canal in parts would take longer than if the unit was sold as an entire business, and this could jeopardise Vivendi's plans to raise cash quickly.

"Canal Plus rose last week on hopes a deal [to sell the entire business] was imminent. Now it looks like it's not going to happen, That's what is hitting the stock," a trader told Reuters.

Canal's shares were down 6 percent to 3.80 euros in mid-morning trading in Paris on Monday. Vivendi (PEX) was flat at 17.47 euros.

Vivendi's stock has been strengthening since a management shake-up last month, which saw Fourtou replace the embattled Jean-Marie Messier in the top position.

Messier had been blamed for building up 19 billion euros in debt following an acquisition spree, which included the purchase of Canal, Universal Studios and Universal Music -- making Vivendi the world's second biggest media group after AOL Timer Warner, owner of CNN.

However, Vivendi's shares -- which have fallen about 70 percent in the past year -- have been hit by the recent market volatility and ongoing concerns over the group's finances and accounting practices.

On Friday, Vivendi postponed the publication of its first-half results -- scheduled for release on July 26 -- as talks continued with banks over emergency loans of between 2.5 and 3.0 billion euros needed to avoid a cash crunch.

According to reports, Fourtou's priorities are to improve Vivendi's cash position, reduce the group's debt and cut its losses -- including those at Canal Plus -- and conduct a three-month review of the Vivendi's business strategy.

Fourtou's plans for Canal Plus may include the sale of it Spanish, Polish and Belgium subsidiaries, as well as its distribution arm UGC and new media operations, Le Figaro reported.

"Canal Plus will remain part of Vivendi Universal, confirming the group's media-focused strategy, but Canal Plus will cease to exist in its current shape. All operations of Canal Plus Distribution are up for sale," the paper said.

Fourtou is expected to present his plans at a Vivendi strategy meeting on Monday abd to France's broadcast regulator CSA on Tuesday.

Vivendi has not commented on the reported plans.