Vivendi sinks on €10bn write-off fears

Shares in Vivendi Universal sank as investors worried that the company will today unveil a multibillion-euro write-down, taking in the value of its most recent acquisitions.

Analysts estimate the impairment charge, to accompany second-quarter results, could be€5bn (£3bn) though some forecasts put the figure as high as €10bn. Others suggested the charge would be under €1bn. The market will also look for news on Vivendi's cash position and strategy.

The embattled media giant has already been forced to swallow about€17bn in goodwill write-downs with its first-quarter results, leading it to declare the biggest loss in French corporate history.

Jean-Rene Fourtou, brought in as chief executive last month to replace Jean-Marie Messier, is conducting a strategic review of the company's assets, to decide what must be sold in order to bring down its €19bn debt. However, it is clear that even businesses that were bought recently are worth nothing like the sums Mr Messier paid for assets in a reckless spending spree.

The biggest write-down may come in the value of USA Networks, which was valued at €10.3bn when Mr Messier agreed to buy the film and television business last year. The impairment in its value is estimated at €3.5bn. Vivendi's telecoms assets are also expected to see write-downs and there may be a further decrease in the value of Canal Plus, its pay-TV company. Merrill Lynch forecast second-quarter earnings, before interest, tax and goodwill, to be flat at €1.4bn.