Vivendi's Global Grab
Jean-Marie Messier is cooking up deals faster than a chef in a Paris bistro. The 43-year-old chief executive of French communications and utilities group Vivendi is in talks with America Online Inc. about joining a new Europewide Internet portal he's launching with Britain's Vodafone AirTouch PLC. He's negotiating to join media giant Rupert Murdoch in a global satellite television and Internet venture. And in Hollywood mogul style, Messier has had closed-door discussions with Seagram Co. In a long-shot bid, he is said to have offered at least $30 billion to acquire the Canadian company and its Universal Studios Inc. and music subsidiaries.
Messier is reveling in the attention. "Vivendi will be one of the very few top communications groups of the Internet age," he says, relaxing in his private dining room overlooking the Arc de Triomphe. Of course, Messier still has to prove he can coax real profits out of these hot ventures. And it wasn't so long ago that Vivendi itself looked like takeover bait. But if Messier can deliver, he will prove he has the staying power to be a true champ of the Net.
It's certainly true that every media biggie in Europe wants to talk to Messier. Europe is about to fast-forward into the Internet age, with telephone and media companies rapidly expanding their capabilities to offer Web access by cell phone and digital TV. Recent deals such as Vodafone-Mannesmann are creating companies big enough to rule the market. Yet these giants are missing a few vital organs. Some need snazzy content to offer customers. Others need broader reach. Vivendi could fill the gaps with its content--everything from financial Web sites to interactive games for kids--and a pay-TV operation, Canal+, that reaches 14 million households.
Messier wasn't always in such good shape. Last spring his long-sought linkup between Vivendi's Canal+ and Murdoch's satellite-TV operation, British Sky Broadcasting Group PLC (BSkyB), foundered. He failed to make subsidiary Cegetel a telecom powerhouse. Investors started to fret about the $17 billion in debt he took on to acquire new utility companies. Takeover rumors started swirling.
PORTAL POWER. But Messier was dealt an unexpected ace late last year when Vodafone launched its hostile takeover of Germany's Mannesmann. Suddenly, he was courted by both Vodafone and Mannesmann, each hoping to strengthen its hand through an alliance. On Jan. 30, Messier and Vodafone CEO Christopher C. Gent announced plans to set up a Web portal offering wireless Internet access via cell phone, interactive TV, and computer. The deal catapulted Vivendi into the front ranks of Europe's Internet economy. Messier predicts that within a year, 30 million people will be using the new portal.
Messier also has gained a stronger hand in his relations with Murdoch. Increasingly seen as a straggler in the Internet revolution, Murdoch plans to spin off his satellite-TV holdings into a new company, Platco, that would develop a wide range of digital services, including high-speed Internet access. Messier may join the venture by swapping the 24.5% stake Vivendi holds in BSkyB for a share of Platco. That would give Vivendi access to Britain and Asia.
Even the recent AOL-Time Warner merger has produced an opening for Messier, as Germany's Bertelsmann sold back its 50% stake in AOL Europe to the U.S. parent company. Now, Messier, who already has a 55% stake in AOL France, wants either a stake in AOL Europe or a partnership between AOL Europe and the new Vivendi-Vodafone venture.
Messier is more than a lucky bystander, though. He has made Vivendi subsidiary Havas a world leader in the publication of educational and entertainment software. At the same time, Messier has reassured investors about his long-term strategy. He recently announced plans for a separate listing on the New York Stock Exchange for Vivendi's water, waste, and energy division. Vivendi may eventually cede majority control of the unit. "It indicates very clearly that their core business will be telecoms and media," says Pierre Stiennon, an analyst at J.P. Morgan & Co. in London who had criticized Messier's schizophrenic strategy. Profits last year rose 27%, to nearly $1.4 billion, on sales of $41 billion. And even though Messier faces flack for recent moves to restrict the rights of shareholders, Vivendi's stock has rebounded 25% since January.
Messier still has to deliver the goods. To lure subscribers to the Vivendi-Vodafone portal, he'll have to repackage Canal+ and Havas content that's now designed mainly for noninteractive TV and personal computer. No one expects people will watch feature-length films or sports events on their cell-phone screens, but Canal+ might develop entertainment and sports sites that would grab their attention. Marshaling Havas' resources for the new venture could be especially difficult: Havas has been loaded up with recent acquisitions that it has barely had time to digest.
Messier will have to act fast, too. His first test will come in late May, when Vodafone and Vivendi are scheduled to roll out their first wireless Internet portal in France. Adding to the uncertainty, neither Vivendi nor Vodafone has experience in e-commerce.
What's more, it's far from certain that Messier's talks with other prospective partners will yield fruit. Several earlier efforts to cooperate with Murdoch have foundered. And a Seagram deal--which neither Vivendi nor Seagram will comment on--looks even more doubtful. A source close to Seagram says that talks between the two companies have not progressed far, and that no discussions are currently under way. Messier would love to add Universal's properties to Vivendi's content. But, says a major Seagram investor, "it's not a great fit." Despite Vivendi's strength in film and television in Europe, he adds, "they have nothing in the U.S., which is where Seagram needs to add scale."
Whatever happens, Messier promises Vivendi will keep seeking acquisitions and alliances. He's especially keen to expand Vivendi's holdings in telecom and broadband technology, so it would control more of the channels through which content is delivered. His plans aren't limited to Europe either: "Down the road, we will be a global operator." With ambitions like that, Messier is sure to keep plenty of pots on the boil.