Still, It's Nice to Know You're Wanted

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Vivendi CEO Jean-René Fourtou got his first good news in months last week when Texas oil magnate Marvin Davis ponied up $20 billion for the group's U.S. entertainment assets. The stock leapt by over 20% on the news. Investors got even more interested after Vivendi officials played hard to get — spurning Davis' offer as both incompatible with group strategy and insultingly low. "When a guy offers $20 billion for our U.S. group, we tell him to take a hike," says a Vivendi official in Paris. "If he offers $40 billion, maybe we might take it more seriously but still not deal, because these interests are key to our long-term strategy." But just what is Vivendi's long-term strategy? Officials won't say. They do acknowledge that the company is close to selling half of its 40% stake in its water and waste unit — the group's original business — as part of a wider sale of non-core assets intended to cut a crippling $19 billion debt. The refusal of the Davis offer, and news that the group may not finalize a new credit line negotiated with banks, suggests the short-term financial situation may not be as dire as once thought — and that an anticipated fire sale won't happen. But Vivendi's strategic focus on entertainment raises new questions over whether the firm will splash out $4 billion for the 26% stake in its French telecom unit Cegetel that's now available — a highly profitable business that co-holder Vodafone also covets.

FILM INDUSTRY
The Last picture show
it's as true in the film business as it must have been in gladiatorial combat: size matters. Yet it was an unexpected blow to Britain's film industry when the Mill, whose work in Gladiator made it Britain's only Oscar-winning visual-effects company, announced its withdrawal from the business last week. Britain's special-effects sector has long punched well above its weight, with a raft of stunning films, from The Red Shoes to some of the James Bond flicks produced at Pinewood studios. The Mill's film unit, which also worked on the latest Harry Potter release, has helped lead the country's efforts at rivaling Hollywood's prowess. But CEO Robin Shenfield says that a firm like his, which grows to around 150 employees to work on a project such as Gladiator, simply can't afford the expansion needed to compete with U.S. giants like Industrial Light + Magic, which has around 1,000 full-time staff. The Mill will now concentrate on its advertising business, which provides more consistent work. For boosters of Britain's, and Europe's, film industry, that's not a happy ending.

EUROBLUES
all worked up
Thanks to the stagnant economy, Chancellor Gerhard Schröder is probably the least popular man in Germany. Last week his former Finance Minister, Oskar Lafontaine, compared him to Heinrich Brüning, the last Chancellor of the depression-plagued Weimar Republic, which set the table for the Third Reich. Now the European Parliament has passed a bill that may make Germany's rigid labor market even worse. The directive gives temporary workers across the E.U. the right to the same pay and benefits as permanent staff from their first day of work. That vastly increases the labor costs of hiring temps, negating their whole purpose. The U.K., home to two-thirds of all E.U. temporary workers, will fight the bill.

INDICATORS
adverts go up in smoke
The European Parliament came one step closer to a pan-European ban on cigarette advertising, voting to outlaw tobacco ads in newspapers, magazines, radio broadcasts and websites as early as 2003. The bill needs approval by E.U. health ministers and member governments before it takes effect.

Islamists get interested
Sunni Islam's most influential body, Cairo's al-Azhar Institute, voted 21 to 1 to allow fixed-interest rate banking — usually condemned as usury by conservative scholars. About 90% of the world's 1 billion Muslims are Sunni.

singing the blues
The recording industry shuddered as British music giant EMI admitted its sales will decline between 3% and 6% this year, missing the company's previous, modest forecast that sales would stay flat. Shares in EMI, which returned to profit thanks to an aggressive cost-cutting program, fell sharply as it blamed its troubles on a general decline that saw industry sales fall 9.2% in the year's first six months.

a new bubble market
Thanks to free-trade negotiations with the U.S., chewing gum in Singapore will no longer be a crime. But although the 10-year-old ban is being relaxed, gum will only be sold in pharmacies, by prescription.

BOTTOM LINES
"Unfortunately we can't always stop people acting spontaneously."
DEREK ANDREWS, Wolverhampton and Dudley pub boss, on being fined for allowing customers to "move rhythmically" without an entertainment license

"We are not starving to death, because we're living on past wealth."
YOSHIMASA HAYASHI, Japanese parliamentarian, on the country's worsening financial crisis

"I feel like we're in the U.K. just before Margaret Thatcher came on board."
THOMAS KEIDEL, chairman of Mahr GmbH, on German economic woes