The latest big-business accounting debacle involves a major player in the
classical music world, Vivendi Universal.  This is the company that owns
what used to the Polygram labels, such as Decca/London, Philips, Deutsche
Grammophon, Argo, Archiv, etc.

Their stock fell a whopping 34% today before trading was halted on news
that the company used favorable but conflicting accounting practices from
the U.S.  and France, combined with dodges of the British tax law, to cause
a US$1.5 billion debt consolidation to appear as a profit.  This type of
consolidation is not legal in France where the company is headquartered.
On the news, French investors dumped their stock, and as a result Moody's
downgraded their stock to junk bond status.

Vivendi issued a press release stating that "Contrary to the information
published by Le Monde (July 2, 2002), VU has strictly applied the required
accounting treatment ... in its 2001 accounts".  But that didn't keep
Vivendi's CEO from resigning yesterday.

Last year Vivendi had a net loss of over US$12 billion on sales of
over US$51 billion.  This latest stumble may signal the end to the
global media giant's quest to provide digital music and video throughout
the world by acquiring every movie studio, record label, web site, and
media company in sight.  It appears they may need to break up the company,
which may actually be good news of fans of these labels.  Under mega-corp
guidance, these labels have laid off staff, dropped recording contracts
with orchestras, and moved gradually away from serious classical music,
marketing more and more crossovers, soundtracks, and special events.
Perhaps a downsizing will renew their focus.

Dave
[log in to unmask]
http://www.classical.net/