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Is Sky Global Within Vivendi's Reach?

Media: Analysts say an agreement with Murdoch makes commercial and geographical sense, but there are also major obstacles to any cooperation.

September 21, 2000|SUE LANDAU | REUTERS

PARIS — When Jean-Marie Messier, chairman of France's Vivendi, netted Canada's Seagram in June, Rupert Murdoch sent him a message that read, "You have guts!" Messier said in a book just published in France.

However, the Vivendi chief will need more guile than guts to reach a deal between Murdoch's Sky Global Networks and Messier's own embryonic media and entertainment empire, Vivendi Universal, media analysts said.

Messier has a 20% stake in Murdoch's British satellite TV platform BSkyB and wants a role in Sky Global, which will group Murdoch's satellite TV interests and is slated for an IPO this year.

He told Reuters this week that Vivendi's BSkyB stake was of strategic use to Vivendi Universal only if he got a deal with Murdoch on Sky Global since Vivendi Universal did not intend to hold nonstrategic stakes. He did not elaborate.

"Messier has tried to use his stake in BSkyB as a stick to beat concessions out of Murdoch. . . . I honestly do not see Murdoch conceding to this sort of demand," a London-based analyst said.

"Messier has the power to block the operation Murdoch wants to carry out by opposing the share exchange. . . I do not know if Murdoch will make concessions. If this [accord] fails, it will be for personality reasons," a Paris-based analyst said.

An agreement between the two media moguls' empires has commercial and geographical logic, but there are also major obstacles to any industrial cooperation, analysts said.

Vivendi Universal, the media and entertainment giant to be formed from Vivendi, its pay TV unit Canal Plus and Seagram, would bring Sky Global an Internet arm in the form of Vizzavi, Vivendi's multi-access Internet portal venture with mobile phone group Vodafone.

"For Vivendi, it would be as important a deal as that signed with Vodafone to form Vizzavi. For Sky Global, it would represent billions of euros of extra value," a London-based analyst said.

Another bonus is that Murdoch and Messier's empires hardly overlap geographically. While Messier's has a much broader European base, Sky Global's 85 million subscribers are in places that Vivendi cannot reach, such as Asia and Latin America.

"All this brings opportunities on the one hand for Vivendi to make money from content, and on the other hand for Murdoch to gain subscriber loyalty and reduce costs," an analyst said.

However, the two clash in Italy, where Murdoch runs recent satellite TV platform Stream and Canal owns established satellite TV operator Telepiu. Messier does not want Stream in Sky Global.

Also, each has separate competing subsidiaries providing technological solutions for interactive television, NDS for Murdoch and Canal Plus Technology for Vivendi.

The two also use different navigation technology for their interactive television services. Canal has MediaHighway and BSkyB uses OpenTV systems, which means viewers wanting to access both would for now need a second set-top box.

However, Sky Global is not Vivendi's only possible partner. If Messier cannot wring the deal he seeks out of Murdoch, Vivendi still has plenty of potential partners that could help it expand beyond Europe or to bring it distribution outlets, one London-based analyst said.

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