The world’s second largest media company, Vivendi Universal, was in disarray on Wednesday as its flamboyant CEO quit amid political manoeuvring and alleged financial wrongdoing.
Jean-Marie Messier, who became the most prominent businessman in France, officially tendered his resignation after two years marked by controversy.
The famously egotistical executive spent ¬100-billion building a Franco-American empire including the film studio behind Oscar winner A Beautiful Mind and the record label that is home to rapper Eminem. But he has brought what was once a staid water company close to bankruptcy as the value of its purchases tumbled once the technology market bubble burst. Last year it recorded losses of almost ¬14-billion and the heavily indebted group could now be broken up.
During his tenure he also outraged the Paris establishment with his American corporate style and clashed with French President Jacques Chirac over the immutability of French culture. There were murmurs this week that French officials had pressed behind the scenes for Messier’s resignation.
The quagmire that Vivendi is now in could prove a damaging setback for plans in France to accelerate its privatisation plan. The government fears that Vivendi could fall into American hands and has already considered renationalising France Telecom.
Messier’s habit of pursuing his own agenda played out to the end on Tuesday when, despite a news blackout at the company, he gave an interview to the French newspaper Le Figaro announcing his departure. ”I tried to do too much too quickly,” he said.
Politically charged sentiment will not be helped by reports in another French daily, Le Monde, which dragged Messier into the financial scandals shaking Wall Street.
It said Messier had tried to circumvent accounting rules to mask the level of debt the company was in. It said the attempt had been overturned by the Paris stock exchange at the end of last year, but was kept quiet because officials feared it could cause a meltdown in the markets. A statement from Vivendi, which is audited by Arthur Andersen, the firm involved in the Enron and WorldCom debacles, vigorously denied any wrongdoing.
The paper claimed there was a ¬25-million loan from Vivendi to Messier to buy shares, on which he has made huge losses. The embattled executive is asking for two years severance pay — about ¬12-million.
Shares in the company, which had already fallen by 70% this year, were dropping so fast by Tuesday that trading was frequently suspended. Investors, as well as Messier’s fellow board members, appeared to have had enough.
Messier, a boyish 45-year-old, became a fixture on the cover of such magazines as Time and Fortune while he built a business to rival AOL Time Warner and Rupert Murdoch’s News Corporation. A feature in Paris-Match magazine showed him ice-skating in Central Park and circling the world in his corporate jet.
His autobiography was titled J6m.com after his nickname Jean-Marie Messier, Moi-même maître du monde (Myself, master of the world). In the book he rails against large payoffs for fired executives.
His fall was dramatic. Last year he was awarded the insignia of the Chevalier of the Legion of Honour, but his love for the United States became too conspicuous for many. He moved into a Park Avenue apartment and became a director of the New York stock exchange and the Whitney Museum of modern art. His habit of wearing a stars and stripes pin on his lapel raised eyebrows in Paris.
When he fired management of a Vivendi subsidiary, Canal Plus, Europe’s largest pay TV business, which is also the biggest patron of the French film industry, he sparked fury among the left- leaning elite.
An offhand comment that the system of protectionism that guarantees quotas for local film and television output — the ”cultural exception” — was dead, saw him mauled in the French press. Chirac said Messier had suffered a ”mental aberration”.
Daring to cross the French establishment proved a dangerous mistake, and by this time he had also made enemies across the Atlantic.
The Bronfman family, which built its fortune in the Canadian spirits business Seagram, acquired Universal in the late 1990s and became the largest shareholders in Vivendi when they sold out to the French company for $30-billion in 2000. Horrified by the shrinking value of their 5% in the company, they led the mutiny and called for Messier’s resignation at a fractious board meeting last week. He was eventually forced out when the French directors also turned against him.
In his interview with Le Figaro, Messier said: ”I am leaving so that Vivendi Universal stays. I built this company with my team. I love it passionately. But there is an undeniable truth — you cannot lead a company if the board is divided.” In a parting shot, he asked his replacements not to wreck the empire he built.
Those hopes may go unheeded. Messier’s replacement is tipped as Jean-Rene Fourtou, the respected vice-chairperson of drugs company Aventis, who is expected have a mandate to break the business up. Vivendi is saddled with debts of ¬19-billion and there are fears it may not have enough cash to make repayments. Two banks have refused to approve further loans.
One possible plan would be to split the US and French interests and bring the experiment in Franco-American relations to an end. Media tycoons such as TV mogul Barry Diller, Murdoch and the Bronfmans would all be interested in snapping up the entertainment jewels in Vivendi’s crown. British company Vodafone could be a possible buyer of its telecommunications business.
Messier joins the growing list of businessmen who attained stardom during the extraordinary days of the dotcom boom and have since fallen to Earth.
His vision was of a futuristic media empire that combined content such as movies and music with mobile phones, television networks and the Internet. This was the Martini principle — consumers would be able to watch or listen to Vivendi entertainment anytime, anywhere, anyplace.
In the past year there has been little mention of this strategy. The notion that people would want to watch movies on the tiny screen of a mobile phone has waned.
Vizzavi, the Internet portal that was the glue sticking the rest of the businesses together, has faltered and staff numbers have been cut. A recent attempt by an investment bank to put a price on each of the disparate divisions found Vizzavi valued at zero.