Piracy main deterrant to Vivendi Universal's coming to India: Fourtou

NEW DELHI: Sell, sell and sell more to get out of debt. Dispose off those businesses that are either not profitable or where the shareholding is in the minority. This seems to be the mantra of Jean-Rene Fourtou, chairman and CEO of the Euro 12.4 billion Vivendi Universal, one of the top media companies in the world.

"Hopefully, by the end of 2005 there would be almost nil debt left," Fourtou told during a short interview in Delhi. At the time he took over as the chief of Vivendi Universal in July 2002, the company had run up a net debt totaling Euro 35 billion.

Pointing out that Universal Vivendi would not like to come to India in a big way --- its presence here through Universal Music is almost negligible --- Fourtou made it clear that the decision is linked to the "problem of counterfeiting and piracy."

"It's not in the interest of India, it's a real problem. We all have to cooperate (the system in India and global companies like Vivendi) to neutralize the effect of counterfeiting," Fourtou said. Vivendi operates in 71 countries.

To hammer in his point, he said that the official market of music, globally, is just one-third of the total music consumed worldwide.

According to the man, whom Forbes magazine voted as the 'Businessman of the Year' in 2002, Vivendi would ideally like to expand business to India as almost 25 per cent of their music sales come from outside Europe. "It's a market we should be in, but for this huge problem of piracy," Fourtou added.

Fourtou was in India in his capacity as the chairman of the International Chamber of Commerce to take part in the proceedings of the Indian chapter of the ICC, which is headed by the Onkar Kanwar, promoter of Apollo Tyres.

However, Fourtou didn't want to sound too harsh on India, where the media and entertainment sector is registering a healthy growth and where Vivendi Universal's competitor Rupert Murdoch's News Corp has already established a strong presence through Star.

"It's not only India, but there are several other countries like Russia where this (piracy) problem is big," he said, indicating that organized mafia has got into this business as it's more profitable than peddling drugs and not as dangerous too.

Asked about the worldwide cost-cutting exercise that he has initiated to bring the company back on track, Fourtou downplayed this aspect by saying, "Cost-cutting is not important. What is important is the cash flow and the

company should have positive cash flow by 2005," he explained.

At the moment, the debts of the company are down to around Euro 12 billion and Fourtou is hopeful that sale of some assets would be able to take care of the rest of the accumulated debts.

Pointing out that Vivendi Universal has got out of many businesses to focus on some like telephony and entertainment, Fourtou said, "I have 25 more assets to sell this year."

Groupe SFR-Cegetel is the No. 1 private telecommunications operator in France with more than 17 million customers as on June 30, 2003. Groupe SFR-Cegetel is the only private operator in France covering all telecommunications activities. Maroc Telecom, a 35 per cent Vivendi Universal subsidiary, is another telephony venture of Vivendi, and is the leader in Morocco.

Still, Fourtou evaded direct questions on the financial mess created under the reign of the company's former chairman Jean-Marie Messier.

Vivendi Universal had to reach a final settlement with the United States Securities and Exchange Commission on a complaint filed by the SEC charging violation of certain US securities laws. In the Consent Decree, Vivendi Universal agreed, without admitting or denying any liability, not to violate certain specified provisions of the US securities laws in the future. Vivendi Universal also agreed to deposit a civil penalty of $50 million into a Sarbanes-Oxley "Fair Fund" to be distributed by the court to certain Vivendi Universal shareholders pursuant to a plan of distribution to be established by the SEC.

"The board asked Messier to resign," Fourtou passingly said, while keeping mum that his cost-cutting has resulted in the head of the German operation of Universal Music quitting recently in protest.

But Fourtou is very upbeat on the alliance struck with General Electric for the merger of NBC and Vivendi Universal Entertainment (VUE) in October last. The new company, to be called NBC Universal, will be 80 per cent owned by GE, while 20 per cent shareholding would be with Vivendi Universal Entertainment.

"This sort of a merger creates a company that would have many advantages. Even in the movie business that is very cyclical," Fourtou said.

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