For Subscribers

Get the complete article now!

This interview is a small excerpt from a comprehensive interview published in The Wall Street Transcript as part of the Consumer Sector, available at (001-212-952-7433) or http://www.twst.com/sectors/consum.html

TWST: Can we begin with an overview and historical sketch of Vivendi Universal Publishing (Frankfurt:EAUG.F)?

Ms. Touraine: Vivendi Universal Publishing was formerly the Havas Company. It was a conglomerate of various media activities. Since 4 years, our company has been refocusing its activity on publishing and is now the publishing activity of Vivendi Universal, the 2nd ww communications group, born one year ago. During the last 2 years, VU Publishing has sold all the businesses-related to advertising, movies and TV in order to focus all its activities on publishing. VU Publishing covers literature, reference, education, games and magazines. The size of the company as of today is 3.6 billion Euros, and shows high profitability across all its divisions. I believe VU Publishing is now in a very good position. We are the number three worldwide publishing company, the number two worldwide education company and the number two ww games company on PC, although I hope that very soon we will be among the top three in the growing consoles' market.

TWST: If we look to the next maybe 18 months or 24 months, what are some of the goals on the agenda that you would hope to have accomplished or initiated?

Ms. Touraine: During the next year again we will have to consolidate our position as the number three worldwide publisher, which means that we have to fully integrate Houghton Mifflin that we bought last August. So far the integration is going very, very well, but we have to make sure that in 2002 the integration is fully accomplished. Another goal is the growth of our Games business. We have an extensive plan on consoles, as, to date, we have been a company focused on PCs. Next year therefore, we plan to have almost 50% of our games' net sales on consoles, which is very important for us. An additional goal for the games' business for next year is to continue to have a 20% profitability and above. I believe that we will be one of the most profitable companies, worldwide, probably being number one. Next year our games activity will increase again with about 20% profitability.

TWST: Are you noticing any emerging trends in your markets that may have an impact on your business strategy or trends that you are already well-positioned to capitalize on?

Ms. Touraine: Let me first of all remind you that we have a very low exposure on advertising and I therefore feel that we are not exposed at all to any kind of negative impact from its evolution. The trends that we follow as key to our businesses are education and games. Education is obviously cyclical but not volatile. We know the cycles well in advance and, as an example, one of the important cycles is reading in California next year. Houghton Mifflin is very well positioned, and we expect that this will be the program that will be adopted. However, I must say that, overall the adoption cycle is quite low next year. However, the trend for games is very positive. This is also because of all the consoles arriving in the market, such as the Xbox, Gameboy Color, the penetration of PS 2 and our leading position on PCs. So, again, we expect to have a growth of about 20% next year on the games business. Of course, nobody knows what may happen next year, even with the predictable sector trends.

TWST: Is digital TV a growth driver?

Ms. Touraine: I am not really sure what impact the digital TV expanding market will have on our business next year. We currently look at this as one of the platforms that support our multi-platform strategy. What is important to us is to digitalize our content in order to be able to offer products and services at lower cost across all platforms. Especially in the US as textbooks customization is really the name of the game and in order to be able to customize our content on a cost-effective manner it is very important to fully digitalize it. Furthermore, this is one of the reasons why it is very important to be global: digitalization is not so easy and it is an important investment. When we digitalize on a worldwide level, we can fully leverage our content throughout the organization and take advantage of the scale effect.