Vivendi Universal is holding talks with Microsoft
about the sale of parts of its video game business, people close to the negotiations
said yesterday. Microsoft is exploring the purchase of Vivendi’s best game-making
studios, these people said, though they added that the discussions could still
stall or collapse.

The chief executive of Vivendi Universal, Jean-René Fourtou, has been
considering several options for the company’s video game business, which makes
popular titles like Diablo II and games based on the “Lord of the Rings”
books. Among the options are a public stock offering and a partial or complete
sale.

Microsoft has made no secret of its desire to bolster its portfolio of video
games to help increase sales of its Xbox console, which have been disappointing.
Producing more games for the Xbox is one way to increase sales, and Microsoft
has acquired several small software developers, including 49 percent of Rare,
a British company that had made games like Donkey Kong Country exclusively for
Nintendo. . . .

“Microsoft doesn’t want to leave the development of video games for
the Xbox in someone else’s hands,” said Jeff Van Rhee, director for
enterprise software research at Investec, an investment bank. “Buying
Vivendi lets Microsoft control its own destiny.”

Vivendi also remains in touch with Electronic Arts, another game maker, and
the Sony Corporation about the division.

Andrea Sarasian, a spokeswoman for Vivendi’s game business, declined to comment
on any negotiations. Marianne Allison Ward, a Microsoft spokeswoman, also declined
to comment.

By selling its game business, Vivendi could raise as much as $1.5 billion,
allowing it to continue reducing its debt. Net debt fell to 13.9 billion euros
at the end of 2002, from 22.4 billion euros six months earlier, but it is expected
to rise now that Vivendi has agreed to spend 4 billion euros to gain control
of Cegetel, a French phone company.

Moreover, a sale of the game business would not be subject to any of the restrictions
that would govern the sale of other entertainment divisions, namely the Universal
studios, theme parks and cable assets.

Deliberations over the future of the game division come as Vivendi considers
options for its American entertainment businesses, including spinning them off,
selling the businesses outright or divesting itself of certain divisions piecemeal.
A decision on the game division would probably be made independently of the
other entertainment businesses, a person close to Vivendi said.

News Source: New
York Times.

Filed under: News

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