01/10/2002

It would appear that despite its intentions to the contrary, Vivendi Universal now owns 55.3 per cent of French film distribution group, UGC a market leader in Europe.
BNP Paribas is said to be responsible for this state of affairs after its subsidiary company, PAI, sold its 16 per cent holding in UGC last 5 July. Vivendi Universal was obliged by law to purchase these shares for the equivalent of Euros 50mn and today the media giant finds itself the majority shareholder with 55.3 per cent of UGC (instead of its initial 39.3 per cent). It is the Verrechia family however, and not Vivendi Universal who control the board.
This information was only revealed yesterday by the French financial press and the fact that its coming to light coincides with the announcement that Italian pay-TV, Telepiu, has not after all been bought by the News Corporation does nothing to help Vivendi Universal. The French colossus was eager to dispose of its holding in UGC.
The situation is complicated even further by the fact that UGC (who own 850 screens in Europe with a 64 million audience, and also operate in the production and distribution arenas) must approve the sale. UGC fully realise the difficulty of their coming up with an alternate European buyer. French legislation regarding competition prevents UGC’s main competitors, Gaumont and Pathé - who joined forces to create film programming giant EuroPalaces - from buying up UGC cinemas and any potential interest from America would almost certainly result in a government veto. Thus Vivendi Universal finds itself at the centre of another problem it would gladly have done without.

(Translated from French)