Just what is going on at Vivendi Universal? In September, the company reported a second-quarter loss of 1.86 billion euros - almost double the loss it posted for the same period last year. And yet, the chairman and chief executive, Jean-Rene Fourtou, released a statement that said: "The reorganisation of Vivendi Universal is almost complete. Its financial position is restored."
He promised that the company would not only rein in its debts -which stand at more than six billion euros - but that it would make a profit of more than a billion euros next year. To a casual observer, this might seem overly optimistic. But there are several factors on Fourtou's side, including some political intrigue that adds extra spice to a story that already reads like an airport novel.
Let's recap for those at the back. Vivendi started out as Generale des Eaux, a 150-year-old company whose core activities were litter and sewage disposal. In 1996, the former finance minister Jean-Marie Messier took charge. He changed the company's name to Vivendi and began buying up media concerns, seemingly obsessed with the idea of creating an entertainment giant. In 2000, he paid $34 billion for Seagram, which included the Universal conglomerate.
But the dotcom crash and 11 September ended Messier's dream. Hampered by debt, and with a strategy that clashed with the collapse of the new-media economy, Vivendi Universal's share price went into freefall. By March 2002, it had reported losses of 13.6 billion euros for the previous year - the largest in French corporate history. With shareholders baying for his blood, in July 2002 Messier resigned. Fourtou, the patrician former chairman of the drugs manufacturer Aventis, was brought in to dismantle Messier's empire and save the company.
His most high-profile move was to merge Vivendi Universal Entertainment with NBC (for $3.8 billion in cash and $1.6 billion debt), while retaining a 20 per cent stake in the operation.
At the time, Fourtou said the sell-offs would be complete by the end of 2004. Only then would he "reflect on (Vivendi's) strategy for its telecommunications and entertainment interests".
So what now? Certainly, the group's financial situation is not as bleak as it looks. It points out that its results include the debts it took on board with the creation of NBC Universal - adding that these were exacerbated by the dollar-to-euro conversion. Analysts say it is more revealing to look at Vivendi's operating profit, which was up 8.4 per cent to 1.82 billion euros for the first half of 2004, largely driven by a rise in profit at the group's telecoms unit, Cegetel SFR.
The intervention of Nicolas Sarkozy, the popular French finance minister (and, if the media are to be believed, future president), has also aided Vivendi. Sarkozy has pledged to support French industry, and backed up his policy by evoking an obscure piece of tax legislation to give the company a multibillion-euro windfall.
The BMC (Benefice Mondial Consolide) was designed to encourage multinational companies to create jobs in areas of high unemployment. Promising 2,100 new posts exempted Vivendi from four billion euros of tax over the next five to seven years. The newspaper Liberation called it "perhaps as important for the group as the creation of NBC Universal".
Nevertheless, Vivendi is a shadow of its former self. After selling off most of its worldwide publishing, internet and entertainment interests, it is now focused on three areas: television, through Canal Plus, which airs the hit shows Les Guignols, France's answer to Spitting Image, the satirical magazine show 20h10 Petantes, and Le Grand Journal, presented by Michel Denisot; music, via the Universal Music Group, and telecoms, with Cegetel SFR. It also has a video games unit, VU games.
Recently there have been rumours that Vodafone would like to make a move on SFR, in which it has a 43.9 per cent stake. Vivendi refuses to comment, other than to say that it remains committed to the telecoms business.
This would seem to fit in with Fourtou's apparent strategy for the company, which is to take advantage of the growing synergy between media and mobile communications.
In an interview with the financial newspaper La Tribune back in March, Fourtou said there was evidence of a "very strong economic convergence between telecoms and the media", adding that he wanted to remain "an important European player in entertainment". When announcing the company's results, however, he stressed that no major acquisitions were on the cards for the moment.
One Paris-based analyst comments: "There is no doubt that Cegetel is the group's backbone, with profits increasing 21 per cent to 1.18 billion for the first half. But investors are still nervous about a move from Vodafone, though that possibility seems to be fading."
He adds that there is also disquiet about the group's music arm, which has seen a dramatic downturn in sales owing to illegal downloading, and VU Games, which has failed to respond to increased competition from the US and Japan. "Those two units alone have lost millions of euros in the past six months," he says. "Sales are slumping and jobs have been lost."
For now, the time when Vivendi Universal was the world's second- largest entertainment company seems very distant. But with its eye on a mobile future, it can't be written off.
Groupe Canal Plus: It remains highly active in television and film production, and has important satellite and digital pay-TV interests, notably CanalSatellite.
Universal Music Group: Labels include A&M, Decca, Island Def Jam, Motown, Mercury, Philips, Polydor and Verve.
Cegetel SFR: The brightest spot in the Vivendi portfolio. Has a presence in Morocco, through Maroc Telecom.
VU Games: Its portfolio includes Blizzard Entertainment, Coktel, Fox Interactive, Knowledge Adventure, Massive Entertainment and Sierra. Entertainment.
Sources: La Tribune/Les Echos/Vivendiuniversal.com.