The pieces are falling into place so fast that Jean-Marie Messier can hardly keep up. Leaping into his chauffeured Renault, the 43-year-old chairman and chief executive of French conglomerate Vivendi speeds to a Paris hotel to meet Edgar Bronfman Jr., chief executive of entertainment and liquor giant Seagram Co. The directors of Vivendi and French pay-TV company Canal+ have just voted to acquire Seagram, creating a $55 billion-a-year film, television, and telecom behemoth that Messier will head. Now, Seagram's board is about to sign off on the deal. Over the next 24 hours, Messier and Bronfman will hop the Concorde from Paris to New York and then to London for a whirlwind of press and investor briefings. "We've created a global leader," Messier says jubilantly, relaxing for a moment in the backseat as his car veers through the darkening Paris streets. And, adds the cherubic-looking boss, "we're going to make the Internet swing."
Headline-grabbing deals; negotiations at breakneck speed; supersonic travel; big, big visions of the Net--it's all pure Messier. This tycoon-in-the-making is a driven, hands-on manager, a relentless dealmaker who's as comfortable on Wall Street as in his sumptuous office overlooking the Arc de Triomphe. The French nickname for this nonstop exec says it all: Jean 4M, for Jean-Marie Messier, Maotre du Monde.
Master of the World. Well, that is stretching things right now. But this guy certainly thinks in superlatives. He has cut a $34 billion, all-stock deal that in size and transatlantic significance rivals that of Daimler Benz and Chrysler Corp. Messier is determined to be the top European player in the fast-converging world of big media, telecom, and the Net. The Seagram deal is probably just a prelude to even bigger adventures in the New World: There's already talk Messier would back a possible Barry Diller bid to buy NBC from General Electric Co. Make no mistake: Americans will be hearing plenty more from this daring and deeply acquisitive Frenchman. "He is at least as powerful as the President or Prime Minister of France," says Pierre Lellouche, a leading member of the Gaullist ruling party.
RIGHT LITANY. It's very impressive. Already Messier knows how to talk like a New Economy CEO. He and his lieutenants--along with Bronfman--use every state-of-the-art buzz word to describe the deal: Global. Media Content. Telecoms. The Net. Wireless. Value-Creating. "Our goal is to provide what the customer needs and wants, all over the globe, through any kind of technology," he says.
But dig a little deeper, and the prospects of this world-beating combination look a lot murkier. By some measures, what Messier is doing is downright scary: Paying a 46% premium on Seagram's pre-bid price and betting he can turn a hodgepodge of media assets into Internet gold. He has to do it fast: Buying Seagram is just the downpayment on the billions and billions he must spend to make this vision click. No wonder Vivendi shares have dropped almost 40% from their six-month high. And if Vivendi stock tumbles further, he'll have to dole out even more shares to the Bronfmans and other Seagram shareholders to deliver on the pre-arranged price. Adding to the uncertainty, the Seagram deal calls for former CEO Bronfman to stay on as vice-chairman, overseeing Vivendi Universal's music and Internet businesses. It remains to be seen whether Messier and Bronfman will see eye-to-eye on strategy.
Press Messier on these thorny questions, and you get some pretty fluid answers. First off, he readily defends his record of building attractive assets. Vivendi is a grab-bag of Old and New Economy operations with total sales of $41 billion and estimated profit this year of $1.8 billion. At the core is a $22 billion giant that runs water utilities, waste-treatment facilities, and other industrial services for cities around the world.
Messier has built steadily on this unexciting business to get some glamour into the company. Using the rich cash flow from the water business, he acquired 49% of Canal+, which, as Europe's largest pay-TV company, is the equivalent of Home Box Office in the U.S., and a 24.5% stake in British Sky Broadcasting Group PLC, Rupert Murdoch's lucrative satellite broadcaster in Britain. He also owns Havas, a major publisher of software, video games, books, and magazines, and has built France's second-largest cellular-phone company, Cegetel. A key Messier ally is Vodafone AirTouch PLC, the world's No. 1 cell-phone operator, which just launched a European portal, Vizzavi, in partnership with Vivendi.
MUSIC ON THE FLY. Like other media moguls, Messier figures 21st century consumers expect to be entertained and informed in new ways. They will still go to movies, watch television, and buy CDs--and Messier now has plenty to offer, from Universal Pictures' hit Erin Brockovich to top-rated Canal+ soccer coverage to hot Universal Music Group artists such as Elton John, the hot rapper Eminem, and country singer Shania Twain. He can leverage those holdings on both sides of the Atlantic, too. Seagram's partly owned USA Networks, for example, might bring Ticketmaster and Home Shopping Network to Europe, while Hollywood movie projects could draw on European talent and financing.
But consumers want much more, and Vivendi Universal promises to give it to them digitally--anytime, anywhere, thanks to the magic of the Net. How might it work? Strolling down the street, you could download songs from your favorite artist onto your cell phone. At home, you could punch a command into your digital-TV set-top box to order back-episodes of a series. At your computer, you could take part in an online Q&A session with a sports star.
Messier is betting that consumers will pay for these services and justify the rich premium he paid for Seagram's entertainment assets. He believes that the Internet will revolutionize the media business and that those who control the content as well as the distribution channels will reap the biggest rewards. That's the same logic behind the Time Warner-AOL deal. Other media heavyweights disagree: Germany's Bertelsmann, for example, is happy simply to offer its content to outside partners who run--and finance--their own portals. But Messier argues that if you don't control both, then you're at the mercy of outsiders. That's a lesson he learned from Canal+, which until now has had to pay steep licensing fees for popular U.S. programming.
The Vizzavi deal with Vodafone is central to Messier's strategy. Indeed, on the same day he sealed the Seagram deal, Vivendi threw a lavish reception near the Eiffel Tower to launch Vizzavi, pronounced "vis-a-vis." His goal is to make Vizzavi Europe's answer to AOL, a portal that would appear as the default home page for the combined 80 million subscribers of Vodafone, Canal+, and Cegetel who will eventually have Internet access via cell phone or digital TV. Unlike AOL, subscribers will get Vizzavi free of charge. Revenues will come from advertising and click-throughs to paid services such as music downloads and live transmission of sports events. The addition of Seagram's entertainment properties gives Vizzavi a big boost, Vodafone Chairman Chris Gent says: "It will be very attractive, especially to younger users."
It's dazzling stuff. With this deal, Messier has the bulk to hold his own against big European media players such as Bertelsmann and Murdoch's News Corp. But making such pieces dance together has been a daunting task for some of the world's best media executives at other companies. Bronfman himself failed to create a first-class media operation out of the Universal assets. It took executives at Time Inc. and Warner Communications the better part of a decade to make their huge merger work.
And what, in the end, does Messier have in the new Vivendi Universal? He now has two operations that are tops in their field: the Universal recorded music business and Canal+, the No. 1 pay-TV company in Europe. Yet Canal+ has lost $370 million over the past two years because of heavy investment in digital technology and the cost of expanding its subscriber base. Canal+ CEO Pierre Lescure expects it to remain in the red this year, too.
There's also red ink on Seagram's ledger. Universal Pictures, weighed down by past box-office bombs such as Meet Joe Black and Babe: Pig in the City, reported operating losses of $140 million during the last nine months. The Universal music business, at least, posted $305 million in operating earnings during the same period, and losses at the studio are narrowing thanks to new hits like Erin Brockovich and Gladiator, which it co-produced. But Messier will also have to sell off Seagram's liquor business, which accounted for 40% of the company's cash flow last year. "I think they are trying to justify the synergies of two companies without cash," says Dom Serafini, a New York-based media consultant.
ME-TOO PRODUCT? Cash is what Messier desperately lacks. Analysts expect he'll need between $5 billion and $10 billion over the next few years to help Vivendi's mobile-telephone operations keep pace with the wireless Internet revolution. That's especially worrisome, since Cegetel is not one of the dominant cell-phone players in Europe--heavyweights like France Telecom and Deutsche Telekom may yet swamp it. In television, Messier will have to spend billions more on the technology that will let Canal+ subscribers log on to Vizzavi. Currently, only one-third of subscribers have interactive set-top boxes. He'll have to share in an estimated $4.5 billion in start-up costs for Vizzavi over the next four years. What's more, over the last year, Universal Music has invested $85 million to digitize its library and pump up its business for the Internet age. It's a good bet that Seagram planned to spend at least that much this year on digital development. All these heavy costs come on top of the $25 billion in debt the new company will have.
Messier is also pretty sketchy on just what he brings to the global Internet party. A lot of it looks like vaporware. The company has only a few wholly owned Internet businesses, and they are tiny. Vizzavi could grow quickly, since Web-enabled cell phones and digital interactive-TV set-top boxes are now being introduced across Europe. But it's way too soon to tell: Vizzavi started operations on June 19 and is now available only in France. Rivals have their doubts. "It looks like a Yahoo! me-too," says Hans Snook, chief of Orange, the big British cell-phone operation, which was just bought by France Telecom. "You can't win with a me-too product," adds Snook, who thinks his own upcoming portal will sport superior technology. Whatever happens, Vizzavi's profits are likely to be negligible for the foreseeable future.
Messier dismisses the naysayers. The sale of Seagram's liquor business could more than erase its current $6.7 billion debt. And within a few weeks, Messier plans to seek a separate stock-market listing for Vivendi's utilities division and offload $18 billion in debt onto it. That way, he says, "our core communications activities are debt-free and are cash-generating." It's unclear, though, how receptive investors will be to shares in a water company that's piled high with obligations.
Messier relies on his ability to shuffle his assets and look for new opportunities when deals don't pan out. The last 12 months of frenzied activity show just how he operates, choosing targets of opportunity with lightning speed. A year ago, his top priority seemed to be to cut an all-encompassing European deal with Murdoch's BSkyB, the British digital broadcaster. The idea was to use Vivendi's big stake in BSkyB to force Murdoch into an advantageous alliance with Canal+. Murdoch refused to play, so Messier moved to another playing field. He positioned himself as the kingmaker in the titanic takeover fight between Vodafone and Germany's Mannesmann. At first, Messier tilted towards Mannesmann, offering to ally his Cegetel network with Mannesmann's cell-phone base. At the last minute, however, he switched to Vodafone, clinching the takeover for the British and earning the admiration even of rivals. "Messier played his hand perfectly," says Orange's Snook.
As he maneuvered for advantage in Europe, Messier got a call last October from Bronfman, who was vacationing in Paris. Arriving in shirtsleeves for an informal breakfast, Bronfman asked about Messier's Internet plans and talked about some of Universal Music Group's Net strategy. For example, Universal recently set up a joint venture with BMG, called Get Music, to create a series of music Web sites. It wasn't until the end of breakfast, Messier recalls, that Bronfman remarked: "Your strengths and our strengths just naturally seem to go together." Messier says he began talking seriously with Bronfman about a deal in early January, making frequent trips to New York.
The Seagram deal is the crowning achievement to date for Messier. An accountant's son, Messier had the classic education of those of the French elite destined to serve in corporations and government ministries: Ecole Polytechnique and then Ecole Nationale d'Administration. As a young bureaucrat, he helped the French government shepherd through the privatizations of former state-owned companies. Quick on his feet, he parlayed that experience into a partnership at Lazard Freres, where he started one of Europe's first leveraged buyout funds. The LBO experience prompted the board of Compagnie Generale des Eaux to offer him the top job. CGE, then primarily known as a water utility, had a stable of assets that Messier promptly started selling off while pumping money into Canal+ and Cegetel and acquiring new holdings such as Havas. Soon after, Messier had changed CGE's name to Vivendi and put his personal stamp on the company as a combination of cash cow and deal machine.
WELL-CONNECTED. As chief executive, Messier has been a tough, U.S.-style manager who has courted American investors and the stateside press. But he still has a French penchant for maintaining close ties to other corporate chieftains and political leaders. While working in government, he forged connections with high-ranking officials such as Nicolas Bazire, who headed the Cabinet of then-Prime Minister Edouard Balladur and now is a top executive of French luxury group LVMH Moet Hennessy Louis Vuitton. And Messier remains close to Lazard, which handled the Seagram deal as well as most other recent Vivendi acquisitions. Also at Lazard, he met Eric Licoys, whom he later recruited to head Havas. Licoys, regarded as Messier's right-hand man at Vivendi, will now be co-chief operating officer of Vivendi Universal along with Lescure of Canal+. Apart from Licoys, he has few key advisers within Vivendi. Says board member Henri Lachmann, who is president of Schneider Electric: "When he has an idea, he discusses it with mirrors of himself: other CEOs and leaders."
For all his success, Messier has never been popular with his countryfolk. Many French dislike his wheeler-dealer style. "People complain that he has a big ego, but there's a lot of jealousy, too," says Walter Butler, a Paris fund manager who once worked with Messier in government and co-authored a book with him on privatization.
ONCE BURNED. Lescure, the Canal+ CEO, is far more sympathique in French eyes. An ex-newsman who loves the entertainment business and works well with often-mercurial creative personnel, he has expanded Canal+ across the Continent while making it a major player in European film production. For that reason, Messier is likely to give him considerable autonomy as he runs the combined television and film businesses. "Vivendi's key asset is Lescure," says Adam Bird, a media consultant for Booz, Allen & Hamilton Inc. based in Munich. "Lescure is visionary. He has shown willingness to make big bets."
Yet Hollywood-watchers wonder if Lescure has taken on more than he can manage at Universal Studios. Canal+ has already suffered a couple of Tinseltown misadventures, including an investment during the early 1990s in independent studio Carolco Pictures. It eventually went bust despite such hits as Terminator 2: Judgment Day. Maybe that's why observers think Lescure will steer Universal away from blockbusters towards more highbrow, less-expensive fare along the lines of Four Weddings and a Funeral. The French swear that they have learned their mistake and that they know what they are getting with Universal. "With Universal, we will have a splendid library," says Marc Feffer, the No. 2 executive at Canal+. Lescure thinks the studio has turned the corner and that the current management is good.
Ironically, while Messier's oversize ambitions have propelled him to global prominence, to make Vivendi Universal succeed, he may have to jettison some of his dream assets. He has long wanted Vivendi to be a major player in Europe's mobile-telephone industry. But Cegetel remains on the second tier even in its home market. Although he denies that he'll give up Cegetel, Vivendi's stake in it may yet have to be auctioned off to bankroll other parts of the empire.
Messier has weathered storms before. Late last year, his acquisitions had put the company $17 billion in debt, prompting a downgrade of its bond rating. Confusion about his strategy depressed Vivendi's stock price so much that it was seen as takeover bait. Yet this year, Messier turned into the predator. Even his stalled gambit with Murdoch may pay off. Just as Messier was closing in on Seagram, he renewed talks with Murdoch about swapping Vivendi's BSkyB shares for a stake in a digital-TV and Internet venture that Murdoch is launching. Messier says the talks are still underway. Such a stake could prove lucrative, either to add to or sell outright when the next opportunity comes along or when the bills really get too high.
There are hazards aplenty. Outsiders have rarely made it in Hollywood, and big media deals based on grand convergence theories have a history of misfiring. So far, this brainy Frenchman has managed to stay ahead in the game and never fail. And some investors are betting on his consummate skill. "I really trust Jean-Marie Messier is not an idiot to spend so much money just to make the same mistakes others have," says Fulvio Maccarone, portfolio manager for French equities fund Pictet Val France. Now, global stardom is within Messier's reach--and an audience of millions will be watching. Hey, this show could get interesting.