The head of Universal Music Group's international operations has been named chief executive of the world's largest music company, succeeding Doug Morris.

Lucian Grainge, Morris' hand-picked successor, will take over as CEO on Jan. 1, 2011, sharing responsibility with Morris until that time. The 71-year-old Morris, who has headed Universal Music since 1995, announced his plans to step down in November. He will remain chairman of the label.

Grainge, 49, for the last five years has run the international group, where he has helped grow the label's market share and introduced new acts. He started his music career in 1997 with CBS/April Music, finding and developing new artists. He assumes the reins of Universal Music Group at a time when music piracy continues to erode sales. The label, home to Lady GaGa, U2 and Rihanna, saw a 5% revenue decline in the nine months that ended in September.

Universal Music has attempted to develop new digital revenue streams through ventures such as its new, ad-supported Vevo online music video service developed with the help of Google Inc.'s YouTube.

[Updated at 9:01 a.m.: Grainge said he has seen some success globally with emerging services like Spotify, the Swedish firm that offers on-demand music streaming, in both free and premium services. Nokia's "Comes With Music" offering, which gives customers who buy a Nokia mobile phone a year's worth of unlimited access to songs on the device, has done very well in certain markets, he said.

"I'd like us to continue to build those relationships and build the ability for us to do business with different businesses, using the music and the artists and the brand of the artists to get the music sexily and legitimately to as many people as we can," Grainge said.]

Jean-Bernard Levy, chairman of the Vivendi management board, lauded Grainge's willingness to take risks and experiment with new ways of getting music to consumers.

"His track record speaks for itself, finding stars, growing revenues and building new business models," Levy said in a statement. "He has the right combination of experience and innovation to take UMG forward as the migration into the digital era accelerates.”

-- Dawn C. Chmielewski

Photo: Lucian Grainge. Credit: Universal Music Group

The rise and fall of Jean-Marie Messier's debt-ridden media empire is an old story in Hollywood, but the company's shareholders are still smarting over their losses.

Today a federal jury in Manhattan offered them some consolation, finding that Paris-based Vivendi SA misled investors about the company's financial health from 2000 to 2002. 

The jury found the company liable on all 57 counts of violating U.S. securities laws stemming from one of several class-action lawsuits brought by angry shareholders. The jury did not award any damages, which will be determined after shareholders file claims.

Vivendi transformed itself from a water utility into a media and telecommunications giant, scooping up Universal Studios and other properties that saddled the company with a crippling $77-billion debt and caused its stock price to plummet.

Vivendi said in a statement that it will appeal the decision. "Vivendi believed, and continues to believe strongly, that it did nothing wrong and that this case raises significant legal issues for foreign corporations doing business in the United States that need to be definitively resolved."

Messier, the company's former chief executive,  was not found liable by the jury;  neither was the company's finance chief, Guillaume Hannezo. Messier testified that he did not mislead investors and that Vivendi's stock price was hurt by various events beyond his control, including a tightening in debt markets. In 2003, Vivendi agreed to pay $50 million to the Securities and Exchange Commission to settle fraud charges. Messier paid a $1-million fine.

In 2003, Vivendi sold the bulk of its Universal properties to General Electric, but retained 20% ownership in the newly formed NBC Universal group. The company recently announced plans to sell to General Electric its remaining stake in Universal Studios for $5.8 billion. That transaction helped clear the way for cable giant Comcast Corp.’s deal to buy a majority stake in NBC Universal.

Vivendi also owns Universal Music Group, the world's largest music company.

-- Richard Verrier

Photo: Former Vivendi Chairman and Chief Executive Officer Jean-Marie Messier arrives at the federal  courthouse in Manhattan earlier this month. Credit: Timothy A. Clary / AFP / Getty Images

French media company Vivendi may need some extra cash -- and that comes as good news to General Electric Co.

GE has been negotiating to sell its majority stake in NBC Universal to the nation's largest cable operator, Comcast Corp. But before GE can march down the aisle with its new amour from Philadelphia, GE's partner in the venture for the last five years, Paris-based Vivendi, would have to agree to file for divorce.

And that’s where a Brazilian phone company comes in. Vivendi acknowledged over the weekend that it finally prevailed in its months-long bid to acquire a controlling interest in GVT, a Brazilian telecom firm, for $4.2 billion. A few weeks ago it appeared that Vivendi would be foiled in its pursuit of GVT and, therefore, would be in no hurry to unload its stake in NBC Universal.

But now, with a sizable acquisition to finance, it seems more likely that Vivendi will announce in the coming days that it intends to exercise its option to sell its 20% stake in NBC Universal. Vivendi could use the money -- expected to be at least $5 billion -- to underwrite the purchase of the GVT shares.

NBC Universal insiders expect the Comcast takeover to be announced this week.

Under the proposed deal, Comcast would contribute its entertainment channels -- including its nine regional sports networks, E!, Versus, Style and the Golf Channel -- and about $4 billion to $6 billion in cash for 51% control of the new entity.

GE, meanwhile, would contribute all of NBC Universal. It would receive 49% of the joint venture and a payment of about $9 billion, which the new entity would take on as debt.

The deal on the table also would allow Comcast to use cash flow from the joint venture to buy out GE within eight years, according to people familiar with the discussions.

A Vivendi spokesman declined to comment, as did a spokeswoman for GE and a spokeswoman for Comcast.

-- Meg James

They're not exactly shouting "Vive NBC!" within the executive suites of Vivendi these days.

Vivendi, the Paris-based media and telecommunications conglomerate that holds a 20% stake in General Electric Co.'s NBC Universal, said the U.S. entertainment company's contribution to Vivendi dropped 27% for the first nine months of the year compared with the first three quarters of  2008. So far this year, NBC Universal earnings to Vivendi were $190.5 million. For the same period in 2008, NBC Universal contributed $220 million to Vivendi's bottom line.

Ironically, the declining performance of NBC Universal may actually benefit GE. That's because the industrial giant is negotiating to sell a controlling stake in NBC Universal to cable giant Comcast Corp. To do that, GE needs to buy back Vivendi's stake. And a weaker NBC Universal means that Vivendi's stake is worth less.

For those thinking that Vivendi might drop a hint today on its earnings call as to whether it planned to sell its 20% interest back to GE or take it public were disappointed. Although the annual window for Vivendi to exercise its option to sell its stake officially opens Sunday, Vivendi Chief Financial Officer Philippe Capron shed no light on the subject in a call with analysts. He said he would not entertain questions about a possible divestiture of NBC Universal -- and there were no questions.

-- Meg James

Former NBC Universal CEO Bob Wright said he doesn't think Vivendi, the French conglomerate that owns 20% of the media giant will look to unload that stake in a public offering.

What Vivendi will do with its chunk of NBC Universal has become everyone's favorite guessing game, especially now that NBC Universal parent General Electric Co. is in negotiations to sell a controlling stake in its entertainment unit cable goliath Comcast Corp.

In an interview with News Corp.'s  Fox Business Network, Wright said, "I don't think an IPO is such an attractive proposition right in this market." He said he thinks Vivendi will negotiate an exit deal.

Wright did not shed much light on why he thinks GE is looking to sell. He said "this is a depressed time for media. NBC Universal value is lower today than three or four years ago." Asked why then is GE looking to deal, he responded "maybe they worry it won't get much better."

Ever the politician, Wright did not criticize he successor Jeff Zucker's big bet on Jay Leno in prime time. Asked about the move to run the show in the 10 p.m. time slot five nights a week, Wright said, "it's a decision with a long point of view ... they'll have to wait awhile."

-- Joe Flint

Photo: Bob Wright. Credit: NBC

The board of French media and telecommunications company Vivendi convened today in Paris for a lengthy board meeting, but the company would not say whether it had decided to shed its 20% stake in NBC Universal.

Vivendi has time. The window on whether to exercise its option to sell its interest in the U.S. media company -- which owns the NBC broadcast network, Universal Pictures movie studio, theme parks, Spanish-language television network Telemundo and such profitable cable channels as USA, Bravo, MSNBC and CNBC -- officially opens Nov. 15. Vivendi has until Dec. 10 to make its intention known to majority owner General Electric Co., when the window closes for another year. 

Alternatively, Vivendi could decision to hold on to its stake.

"They should keep quiet. You do not want to reveal your hand to the other parties until you have to, and we are still a month away from the opening of the liquidity window," said Claudio Aspesi, a media analyst with Sanford C. Bernstein & Co. in London.  "Why commit to a course of action now, when you have time to decide?"

GE, which owns 80% of NBC Universal, would like Vivendi to make its wishes known sooner rather than later. GE has been negotiating with cable television operator Comcast Corp. of Philadelphia to acquire the controlling interest in NBC Universal. Under the deal being discussed, Comcast would own 51% of the company and GE would hold the remaining 49%. After years of being one of NBC Universal's biggest cheerleaders, GE Chief Executive Jeffrey Immelt has concluded that with several of the NBC Universal businesses struggling, it is time to take a less prominent role in show business.

So far, GE appears to have been negotiating only with Comcast -- and that might be giving Vivendi some concern. The French company wants to make sure that it gets the best possible price for its stake, and single-bidder auctions typically don't yield the highest price.

Vivendi would like to see some other potential buyers emerge, which could help drive up the bids. But one of the most-often mentioned buyers, Time Warner Inc., has made it clear that it is not interested.  Others are watching to see whether Colorado-based cable pioneer John Malone steps in to try to pick up some of the NBC assets. 

People familiar with the situation say that Vivendi would like to unload its stake, and that it privately indicated to GE in July that this would probably be the year that it exercises its option. Since then, however, Vivendi's ambitions to acquire a Brazilian phone company have been dealt a huge blow by the emergence of a Spanish company offering more money. If Vivendi concedes defeat in the Brazilian auction, it no longer has a pressing need for billions of dollars in cash.

The proposed Comcast deal would value Vivendi's 20% stake in NBC Universal at about $6 billion -- a price tag that the French company deems too low, according to people familiar with the matter. It is now up to GE to figure out a way to make Vivendi happy.

-- Meg James

Photo: Vivendi Chief Executive Jean-Bernard Levy. Credit: Francois Mori / Associated Press

The influence of Vivendi over the future of NBC Universal is about more than whether it decides to exercise an option to force General Electric to buy its 20% stake in the movie and television conglomerate.

In a little-noticed provision of the French company's deal with GE, it also has veto power over any change in control over NBC Universal.

On paper, it's feasible that GE could complete the deal under discussion with Comcast Corp., in which the cable operator would get 51% of NBC Universal in exchange for billions of cash and its cable channels, without Vivendi. GE would simply end up with a 29% stake in the new NBC Universal, instead of the 49% envisioned in a deal where Vivendi sells its stake.

But if Vivendi doesn't approve of the deal because it believes it would lessen the value of its 20%, it won't happen.

That's one of many complicated issues at stake for two huge American companies -- GE and Comcast -- as Vivendi's board of directors meets this Wednesday in Paris. One of the primary topics of conversation will undoubtedly be what to do with the company's stake in NBC Universal as it prepares to make an announcement in November about whether it will sell.

The stakes include the future of Universal Music Group, which it owns; Activision Blizzard, Inc., of which it owns 56%; and its telecommunications assets. In addition, there's the potential change in valuations for media companies by next year, when Vivendi could choose again to sell, and the fluctuating value of the dollar.

For more on the power of Vivendi in the future of NBC Universal and what might influence its decision making, read today's Times.

-- Ben Fritz

Photo: Vivendi Chief Executive Jean-Bernard Levy. Credit: Antoine Antoniol / Bloomberg

Vivendi Chairman and Chief Executive Jean-Bernard Levy declined to say what the French conglomerate will do with its 20% stake in General Electric Co.'s NBC Universal. 

"This is not something we should decide now," Levy said at the Goldman Sachs Communacopia Conference in New York.

Levy said that the window for the company to trigger its option on whether to keep its stake in NBC Universal or exit opens in two months and that until then the company is keeping quiet.

If Vivendi does decide to exercise its option, GE would have the right to buy Vivendi's stake. If GE declines, then Vivendi could spin it off to the public. That deal is in place until 2016.

Last year, the weak economy made it a less than ideal time for Vivendi to unload its stake, Levy said.

Levy's decision to keep quiet will probably do little to end speculation about what GE is going to do with NBC Universal (see our previous post on NBC Universal and Vivendi) Last week, JPMorgan analyst Stephen Tusa valued NBC Universal at $30 billion to $35 billion, and added that the unit "is commanding no value in the GE stock price." (That value, by the way, is off from $44 billion in his April 2008 report.)

-- Joe Flint

Photo: Jean-Bernard Levy. Credit: Francois Mori / Associated Press.