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Monday, 1 July, 2002, 14:41 GMT 15:41 UK
Vivendi's problems in the spotlight
Jean-Marie Messier
Messier: "Colourful" chief executive

If they want a nightmare to keep them awake at night, the members of the joint committee of both houses of Parliament scrutinising the Communications Bill, not to mention the culture secretary Tessa Jowell and industry secretary Patricia Hewitt, should contemplate Vivendi Universal.

This Franco-American enterprise with a snappy moniker meant to symbolise trendiness, vibrancy and global scope is just the sort of multinational media empire which, under the provisions of the bill, could take over ITV.

Unfortunately Vivendi is in the process of messily imploding.

New York skyline
Messier was accused of selling out when he moved to New York
Its colourful chief executive Jean-Marie Messier has left his job and the company's share price in Paris and New York is a fifth of what it was at its peak.

It has debts of almost 20bn and last year racked up the largest loss in French corporate history (13bn).

And the group's media interests - notably the French pay-TV company Canal Plus - have suffered in the turmoil.

Vivendi is a company that grew too big too fast (hence the debts).

It now compromises:

  • The world's biggest record company
    Universal Music; one of the biggest Hollywood studios, Universal
  • A major American cable programme supplier, USA Networks; continental Europe's biggest pay-TV company, Canal Plus
    A major French phone company
  • A publishing empire (including Larousse, Harrap and Chambers)
  • An internet portal, Vizzavi
  • A big computer games maker.

Oh, and Connex, the railway company, Onyx, a waste-management company, and Generale des Eaux, a water and sewage company.

Universal was acquired two years ago when Vivendi bought the Canadian drinks firm Seagram (which had earlier swallowed up another films-to-music conglomerate, Europe's Polygram - are you with me so far?).

The Bronfman family, which ran Seagram, are among Jean-Marie Messier's fiercest critics, having seen the value of their stake in Vivendi more than halved since the merger.

Vivendi Universal: A little bit of France in Hollywood
A little bit of France in Hollywood
Vivendi's problems (besides the debts) are legion.

There is Messier's own character: without his enormous drive and ambition the company would not exist, but critics say he is arrogant and secretive.

There is the difficulty of running a company operating in both France and the US, with their enormous cultural and business differences.

Many in France were cock-a-hoop when one of their own acquired such a substantial chunk of Hollywood, but Messier was accused of selling out by his compatriots when he moved from Paris to New York.

Many Americans, on the other hand, reportedly refused to take him seriously.

Crisis

And there is the difficulty of making sense of such a rag-bag of interests.

It may prove possible to achieve synergies between films and publishing and music; there are fewer obvious advantages in combining European transport or water supply with US cable TV.

Earlier this year Messier provoked a major cultural crisis in France when he sacked Pierre Lescure, head of the loss-making Canal Plus, and Lescure staged an impromptu live press conference on the channel.

Amongst other things the two men take radically different views on an issue which has polarised the French cultural establishment - the future of the system whereby broadcasters like Canal Plus help to fund French films.

Lescure defends it, on the grounds that the French film industry would collapse without it; Messier the free marketeer believes it is no longer relevant.

Vivendi Universal's problems are not typical of global media conglomerates - but they are a reminder that size is not always compatible with success.

A version of this column appears in the BBC magazine Ariel

The BBC's Nick Higham writes on broadcasting

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See also:

01 Jul 02 | Business
25 Jun 02 | Business
24 Jun 02 | Business
31 May 02 | Business
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