Messier is way past fear of American cultural imperialism. He’s too busy building an empire. The $34 billion takeover of Seagram is just the latest twist in his high-speed transformation of a 19th-century water utility into a media player. After Messier, 43, took over in 1996, he sold off $15 billion worth of peripheral businesses (like casinos and funeral homes). He spent billions more to buy the largest pay-TV business in Europe and France’s second largest mobile-phone operator. But by last fall, Vivendi had lost momentum; heavy debt and a weak stock made it a takeover target. Then Messier’s crafty, behind-the-scenes alliance with Vodafone AirTouch in another merger battle gave it a powerful new partner: last week, Vodafone and Vivendi launched a Europewide Internet portal called Vizzavi. One day later he announced the plan to buy Seagram, the world’s largest music company and owner of Universal Studios in Hollywood. His ambition: to take American movies like “Erin Brockovich” and pop stars from Canada’s Shania Twain to Sweden’s Cardigans and make them available over Vivendi’s formidable array of distribution channels.
The new $55 billion behemoth will be called Vivendi Universal, and its creation is further proof that in the global media-merger wars, nothing is unthinkable. Yes, an upstart like America Online can buy venerable Time Warner, and two companies so recently defined by water treatment (Vivendi) and booze (Seagram) can aspire to challenge the glamorous new colossus. Not only that, but a CEO barely known in the United States could recast the fate of celebrity media titans like Barry Diller (whose USA Networks may become a cog in Messier’s machine) and even Rupert Murdoch, who had resisted earlier offers from Messier to partner in wireless ventures. Now, Messier hints, he may be too big for Murdoch to put off.
That’s assuming, of course, that the acquisition actually gets done. Messier is paying in stock and the Vivendi share price fell 22 percent in the days after word of the deal leaked out. “The ideas are great; I’m worried about the execution,” says a London-based media analyst who believes the merger will collapse. A lot can happen before November, when two thirds of the shareholders at each of the participating companies need to approve the three-way dealwhich includes Vivendi’s complicated purchase of the 51 percent of Canal Plus it does not already own. And there are some jitters about the merger of egos, even though Messier and Seagram CEO Edgar Bronfman Jr. have behaved like soulmates since their original one-hour breakfast meeting in Paris last October stretched to two and a half hours. As soon as they announced the deal (inaptly code-named “Secret” during negotiations), the two set off on a road show to Paris, London and Frankfurt to appease dubious investors.
One source of doubt was the dismal record of outsiders in Hollywood, which is abuzz with speculation about the latest foreign invasion. When Sony arrived in town on a wave of cash in the early 1980s, it was greeted by a Variety headline written in Japanese characters: buyer beware. Sony would be followed by Matsushitawhich subsequently retreated, selling Universal to Seagram. But Peter Bart, editor of Variety, thinks the French will fare better. His editorial last week was another warning: “Hollywood would do well to awaken to the fact that it is now part of Europe.”
There are reasons to think this invasion will be different. Messier insists he will not dispatch “Frenchies” to run Hollywood. The man who will run Vivendi’s film arm, Canal Plus boss Pierre Lescure, is a charming former TV anchor who plans to stay put in Francebut has been doing deals in Hollywood for years. Universal and the production arm of Canal Plus already work together as owners of Working Title, the London production company. It’s now shooting “Captain Corelli’s Mandolin” with Nicolas Cage.
Another thing: movies are far from the key to this deal. Universal is the most famous Seagram property, not the most valuable. Nearly 80 percent of its entertainment holdings are in music, particularly the Polygram record labels. Merged with Vivendi, the new company will control an unrivaled range of recordings, from Beethoven on Deutsche Grammophon to the “hot country” of Ms. Twain. Messier envisions selling Internet subscriptions to this vast library though interlopers such as Napster pose a threat to the business model. “Vivendi is making a big bet,” says UBS Warburg analyst Kurt Billick, who sees “a lot of uncertainty over the future of the music.”
Messier has shown a talent for thriving in uncertainty. A graduate of the grandesecoles that produce France’s ruling elite, he would go on to turn the establishment on its head. At 29 he was advising the government on how to privatize old state companies. By 38 he was running one of them, Vivendi, and by last year he was jousting with Rupert Murdoch. Messier proposed merging Canal Plus with British Sky Broadcasting, Murdoch’s satellite-TV business. The talks collapsed over who would control the venture, but Messier would not be denied. He built up a stealth 25 percent stake in BSkyB, leading to slammed phones and an icy silence when Murdoch’s people found out.
Now, Messier is turning things around. Murdoch is back at the table, apparently lured by Vivendi’s growing clout. “We’re on speaking terms, and we’re speaking,” says Messier. A source close to Murdoch says talks will begin this week on ways to swap Vivendi’s stake in BSkyB for a share in Sky Global Networks, Murdoch’s new worldwide satellite scheme. Together, says Credit Lyonnais analyst Edouard Tetreau, “they could really become a serious wireless force in the world.” Messier could also play kingmaker to Barry Diller, who reportedly hopes Vivendi will support his ambition to buy NBC, the U.S. television network. Messier says he has spoken to Diller and they will meet to “compare our agendas.” By now, Messier’s global ambition is no secret.
The Hype, the Hope and the Numbers
When AOL bought Time Warner, it had 22 million Internet subscribers. Vivendi claims 80 million “potential” users for its new Internet portal, Vizzavi. That’s how many use wireless phones from Vivendi’s Cegetel arm and partner Vodafone. But it will take time to bring them online - and interest them in music and movies from Universal.
