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Vivendi to Sell Stake in EchoStar at a Loss

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Times Staff Writer

Continuing its retreat from the global media arena, Vivendi Universal on Wednesday said it would sell back its 10% stake in satellite TV company EchoStar Communications Corp. for $1.07 billion.

The sale, set to close Monday, is about $430 million less than what the French conglomerate paid for the stake in January during aggressive U.S. media expansion led by former Chief Executive Jean-Marie Messier that also netted Universal’s movie studio, theme parks and music labels.

Vivendi had believed the EchoStar purchase would help build U.S. distribution for its television shows and films.

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But that backfired when investors rejected the company’s overall strategy, sending Vivendi’s stock tumbling 70% this year and forcing the ouster of Messier.

For its part, Littleton, Colo.-based EchoStar intended to use the cash to help fund its proposed merger with DirecTV parent, El Segundo-based Hughes Electronics Corp. But EchoStar scrapped those plans last week amid regulatory hurdles.

Vivendi is shedding its stake in EchoStar as part of CEO Jean-Rene Fourtou’s plan to sell about $16 billion in assets through next year and lower Vivendi’s huge debts. Other sales this year have included Boston publisher Houghton-Mifflin and European pay TV operations. Vivendi also is selling its remaining 40% stake in its water utility business.

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In other developments Wednesday, Vivendi disclosed that it was taking legal action against a minority shareholder group whose complaints about alleged accounting irregularities have triggered a criminal probe into the company.

Vivendi said the French shareholders’ group, APPAC, made false statements about Vivendi after a police raid at the company’s Paris headquarters last week.

Those comments, Vivendi said in a statement, included false claims that the company was about to be declared insolvent and had filed at least seven different balance sheets.

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“Vivendi Universal considers it has a duty to take legal action in the interests of shareholders and employees, who should not be victims of biased information,” the company said.

APPAC filed a complaint in July alleging that Vivendi had issued false statements about its finances. The complaint prompted a criminal probe that has triggered searches of homes owned by Messier and other former executives. Four investigations are underway in France and the U.S. in connection with Vivendi’s financial disclosures.

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