Messiers Reign at Vivendi Universal

Presented by Sudarshan R Shalibhadra Jain Krishnaprasath SS Sandeep Agrahari Nakul Mallikarjun

Contents
Case overview Messiers leadership style Impact of style Risk factors in expansion plans French social context and role of media Boards involvement Conclusion

Case Overview

Talks about the role played by Jean Messier, then CEO of Vivendi Universal and how he transformed a traditional water company CGE into a global leader in media and entertainment. Messier restructured the company and focused on mergers and acquisitions to further his plans of growing in the lucrative media and entertainment industry. Made various M&A deals with companies such as Canal Plus, Pathe, BSkyB, Vodafone and importantly Seagram which gave him control of Hollywoods Universal Studios.

Case Overview Contd.

Was highly popular with the press and for his leadership style. However, he soon got into troubled waters after the dotcom bust and the 9/11 attacks had caused the markets to drop. Messiers various acquisitions were questioned as some believed he overvalued the companies he bought and paid more than what he should have. There was also huge debt piled up in VUs books due to the various mergers. Was faced with pressure from his home country France who saw him as Americanising the firm with his deals with US companies such as Echostar and USA Networks.

Overview Contd.
Vivendi Universals problems were reflected in its share price which had dropped to an all time low in 2002. Some of the board members had started to resign and it was upto the rest of the board to decide whether Messier would continue or he would be replaced.

Messier's leadership style at Vivendi

Aggressive leadership (A lot of Acquisitions worth 20 billion Euros). Forward thinking (recognized the opportunity in new business fields like media and communication, internet etc.) Risk taking (had different qualifications and experience but joined this industry without any experience). Innovative (Favored the latest technology and new business models).

Contd.

Focused (restructured the whole business from a sewage company to an international telecom company). Self-Protective (allowed his friends and personal connections to the board of VU so that he never had to face NO in his decisions). No consistency (purchase and sale of companies which caused huge losses). Too much attached to his dream (that he never modified his ideas to counter unforeseeable situations like depression, also he agreed to pay more to the companies while acquiring them to complete his dream.)

Impact of Style
Messier had former friends and co-workers on his board to support his decisions, this might have played a role in the board not questioning some of the deals he made. He was aggressive as a leader which translated into his highly publicized M&A deals. He was driven by his goal to be the best in his business which shaped his strategy of transforming the company into a leader in media and entertainment.

Risk factors involved

Attempting to transform a water & sewage co. into a media & entertainment co. no expertise unrelated diversification Overpriced acquisitions that left Vivendi with a pile of debt with high Goodwill assets. For eg. in June 2000 Vivendi's 3 way merger worth $58bn with Canadian group Seagram (liquor conglomerate that owned Hollywood's universal studios & Universal Music) & Canal Plus . Being a strong telecommunication co. now it would become the world's 2nd largest media co. In the bear market Messier explained Seagram would provide content ( music, movies & games ) that could be distributed through strong distributing network

French social context and role of media

Messier came to CGE with a high reputation in the media thanks to his past position in the French government and his work at investment bank Lazard. His initial restructuring of the company was met with approval from media circles which described his plans as refreshing. He was seen as a celebrity CEO and he used his image to serve as a constant point of reference. His rise and his plans were showcased in top business magazines of the world.

Contd.

From a French social point of view, initial expansion efforts were viewed with optimism, however later on the French were concerned with what they called Americanization of the VU group. They were also worried that VUs core businesses in France would be overshadowed by its media businesses abroad. Messier had also commented on French cultural exception being dead in an interview which earned him the wrath of politicians back home including the PM. There was also a cultural divide among the board of directors where the French directors were careful not to openly question Messiers plans as opposed to the North Americans in the board.

Board of Directors Major factors for Vivendis problems

Board Continuously reshaped by Jean Messier; retained loyals & close friends while opponents asked to leave. Members never challenged Messier & new directors even approved unfamiliar deals until things worsened. Few resigned from the board signaling disagreement & some were ignorant of nuances of the deals.

Conclusion
In conclusion, we see that the board was faced with a tough decision of whether to allow Messier to continue or to replace him. Messier had not done any worse than the other competitors and could be given time. However the stock price told the world that he had taken VU down and was now a liability to the company. Eventually, the board does fire him.

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