For nearly ten years, Universal was delighted to accept StudioCanal's investment of hundreds of millions of dollars to offset Universal's financial obligations. During most of this period, StudioCanal and Universal were corporate siblings through common ownership by the French company Vivendi. The StudioCanal/Universal joint venture financed forty-four Working Title motion pictures, including About A Boy, Bill Elliot, Bridget Jones Diary, Frost/Nixon, Love Actually, O Brother Where Art Thou?, Pride And Prejudice, and United 93.

Last October, StudioCanal concluded an audit of the joint venture's development and overhead expenses, which Universal had managed. StudioCanal also concluded audits of Universal's distribution of several of the joint venture-produced motion pictures, in several (but hardly all) Universal-assigned territories and in several (but hardly all) media.

Those audits revealed that Universal was violating its fiduciary and contractual obligations to StudioCanal. For example, based on the audit reports, StudioCanal is informed and believes, and based thereon alleges that: (a) Universal intentionally hid from the partnership and kept for itself benefits it derived from off-balance sheet financing arrangements; (b) Universal failed to report, or reported negligible amounts of, ancillary revenues from sources such as music publishing, only to somehow "find" several million dollars in such revenues after receiving the audit reports; (c) Universal retained for itself financial benefits from vendors, thereby profiting for itself at the expense of its partners; (d) Universal double-charged the partnership for producing and other fees paid to Working Title without StudioCanal's knowledge or approval; and (e) Universal deducted millions of dollars in unsubstantiated expenses before reporting the results to its partner StudioCanal.

After talks and negotiations in the last few months between ourselves and Activision, they have reached the decision that they are not interested in granting a non-commercial license to The Silver Lining, and have asked that we cease production and take down all related materials on our website.

Fleshing out UMG's strategy, Levy said it planned to focus on better exploiting the "monetization of an artist's image" which included branded clothes and TV shows. "This is what we hope will revive our business," Levy said. "People indulge in piracy but spend a lot of money on many other things that are linked to an artist." Levy forecast that "in the not so distant future", traditional music products such as DVDs and CDs would make up less than 50 percent of music publishing revenues.