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Vivendi Universal Posts Record Loss

Media: The company took $15.4 billion of write-downs in the first quarter under U.S. accounting principles.

April 30, 2002|JAD MOUAWAD | BLOOMBERG NEWS

PARIS — Vivendi Universal, the world's second-largest media company, had a record loss in the first quarter as it reduced the value of acquisitions including Seagram Co. and Canal Plus.

The loss widened to $15.37 billion, or $14.93 a share, from $165 million, or 18 cents, a year earlier, Vivendi spokeswoman Anita Larsen said.

The company, which reported under generally accepted U.S. accounting principles for the first time, took $15.4 billion of write-downs in the first quarter.

In the last 18 months, Vivendi Chief Executive Jean-Marie Messier made $100 billion in takeovers to turn a 149-year-old French water business into the owner of a Hollywood studio, the biggest music company and Europe's No. 1 pay television operator. But Vivendi and larger rival AOL Time Warner Inc. have seen losses balloon as they wrote down assets bought when stock markets were soaring.

Vivendi shares have fallen 40% this year as investors questioned Messier's strategy and the former investment banker's ability to reduce Vivendi's $29 billion of debt. Vivendi's shares closed Monday at $32.49 on the New York Stock Exchange, down 38 cents.

In March, the Paris-based company reported an $11.8-billion loss for 2001 under French accounting rules. It indicated at the time it would take a larger write-down under American accounting rules in the first quarter to lower the value of the same assets.

AOL Time Warner last week reported a $54.2-billion first-quarter loss, the biggest in U.S. history, as it lowered the value of America Online Inc.'s purchase last year of Time Warner Inc.

To catch up with rivals, Messier spent $30 billion on Seagram and merged it with Canal Plus, Europe's biggest pay TV company, which he acquired for $9 billion.

In December, Messier agreed to buy the entertainment business of Barry Diller's USA Networks Inc. in a transaction valued at $10.3 billion. He also agreed to pay $1.5 billion for a 10% stake in EchoStar Communications Corp.

The company is switching to U.S. accounting principles to make it easier for U.S. investors and analysts to compare it with peers. Under new accounting rules, companies must write down the value of goodwill as soon as it's considered overvalued.

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