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Broadcast
20th June 2000
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VIVENDI AND SEAGRAM DEAL CREATES WORLD'S SECOND-BIGGEST MEDIA
COMPANY
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The French
company Vivendi and its television subsidiary Canal Plus have
announced a merger with Seagram of Canada in a deal which will
make it the second largest media group in the world. The new
company, to be called Vivendi Universal, hopes to break new
ground in the way it makes money out of providing information
and music to customers. Our Business Reporter Richard Edgar
has this report:
"Leaders from the three companies have been speaking in Paris
this morning about the $34 billion deal. Vivendi Universal will
become Europe's first global entertainment giant and will be
second in size only to America's AOL Time-Warner.
"It is planned that the company will use content from Universal,
a film and music company which is owned by Seagram, and deliver
it through Vivendi's fixed line and mobile telephones and internet
systems.
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The
material is blockbuster stuff. Universal Music is the
largest of its kind in the world with artists like U2
while Universal Films was responsible for Gladiator, the
biggest hit so far this year. Richard
Edgar |
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"An example of how that material can be delivered to
huge numbers of customers has just been launched; Vivendi has
agreed a deal with the telecoms giant Vodafone-Mannesmann, to
build an internet portal called Vizzavi which will allow 80
million mobile customers in Europe to access the information.
"While the core business for Vivendi Universal will be
media, both partners have very diverse backgrounds. Vivendi
used to be a water company and Seagram began life as a spirits
business. Vivendi has said it wants to float off 30 per cent
of its utilities business which is thought could be the first
move in selling all its interests in that sector."
At a press conference announcing the deal, Edgar Bronfman, the
chairman of Seagram, sounded bullish:
 "Today
marks a beginning of one of the world’s leading media and communications
companies. One which is best positioned to deliver to consumers
the extraordinary array of brands, content, services and access,
which they increasingly require in the 21st century."
The Chairman of Vivendi, Jean-Marie Messier, said each of the
companies had something to offer the other. Our reporter Sally
Hardcastle asked Justin Urquhart Stuart of Barclays stockbrokers
whether the reality was that Vivendi has won out.
"Oh yes, I think this is Vivendi really trying to take
the initiative here. After all, what they want to do is really
develop their media business, and of course, that is what Seagram
is primarily interested in as well with its Universal Studio
in Hollywood.
 "As
a result of that, you may well find Seagram giving up elements
of their business. Vivendi want to turn themselves from being
an old utility business into a brand spanking new up-to-date
media business.
"AOL-Time Warner is really the model for it, and the rival
for it. If you can find content to put over the internet then
you are going to have a much stronger product to sell. So in
this case, if you have actually got media production operations
in terms of Canal Plus, and also the Hollywood studios, you
can then route those over internet lines and have a major rival."
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This
may help AOL-Time Warner because it may well sway some
of the arguments they will be having with some of the
competition commissions in Europe to make sure they get
it approved. Justin
Urquhart Stuart |
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Sally Hardcastle wanted to know whether Seagram shareholders
would be happy with an all-share deal?
"In the short term we have seen their shares go up, but there
is an awful lot in this deal. Seagram are changing colours.
They were of course one of the world’s largest spirits and drinks
producers, and they are now giving them up and going directly,
and only, into media."
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It is a major change - if you invested in Seagram
for one reason, that reason has now changed. So it is
a very risky thing for them. Justin
Urquhart Stuart |
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| The
Markets: 12:22 GMT |
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FTSE |
6406.80 |
-11.00 |
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Dow Jones |
12525.7 |
-48.11 |
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Nasdaq |
2467.70 |
-9.91 |
| Data delayed at least 15 minutes. |
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