VIVENDI TO UMG:
YOU AIN’T GOING NOWHERE

In the dark days following the disastrous 2000 merger of Vivendi and Universal, most industry watchers expected the French conglom to sell off Universal Music Group to ease its debt load, just as it sold off Uni’s movie and TV assets to GE in 2004. But earlier today, at Vivendi’s shareholder meeting in Paris, new CEO Jean-Bernard Lévy revealed that he has no intention of selling the world’s dominant music company. "Ten years from now, the music company will still be part of Vivendi," Lévy announced.

Afterward, in an interview with the Wall Street Journal, the first U.S. publication reporting the news, Jean-René Fourtou’s successor said that UMG is central to Vivendi's future and will remain in French hands for the long term, telling potential suitor, “It’s too late.”

That’s apparently OK with UMG chief Doug Morris, who told WSJ, "We get along with them very well."

Vivendi’s upbeat attitude is due in part to the dramatic lessening of debt under Fourtou’s watch, which is now down to €4 billion ($5.1 billion), along with the forecast that net income, should top $2.3 billion this year and $2.9 billion in 2006.

Lévy tells WSJ he sees bright days ahead for the downloading biz, which he says accounted for 4% of UMG’s revenue in Q1 2005, doubling last year’s percentage, and could represent 20% of the company's revenue in time. He also believes UMG is in the early stages of pioneering a new revenue model in the wake of the deals it recently hammered out with video-on-demand services like Yahoo, AOL and Microsoft.

In Q1 2005, UMG revenue was up 6% to $1.3 billion, contributing to a 9% increase, or $6.1 billion, for Vivendi as a whole.