The extraordinary rise and fall of Jean-Marie Messier

The Man Who Tried to Buy the World: Jean-Marie Messier and Vivendi Universal
by Martine Orange

Jean-Marie Messier has been called the most ambitious French empire builder since Napoleon. He started as a bureaucrat at a sleepy French water utility, but he dreamed of being a global media mogul like Rupert Murdoch. And like Napoleon, he shocked the world with his accomplishments-until his inevitable downfall.

In just six years, through guile, luck, and clever accounting, Messier managed to gobble up media assets as diverse as MCA Records, Universal Studios, USA Networks, and various publishers, theme parks, videogame producers, and Internet companies on both sides of the Atlantic. He turned Vivendi Universal into a serious challenger to AOL Time Warner, News Corp., Viacom, and Disney. And in the process, he became a poster boy for the new economy, and one of the few European CEOs to act like a swaggering American.

But in 2002, everything fell apart. In The Man Who Tried to Buy the World, Jo Johnson and Martine Orange-the reporters who blew the lid off the story and often clashed with Messier-offer a page-turning narrative of the arrogant CEO's demise. The book details Messier's incredible hubris, which led him to buy more assets than he could possibly manage, while drowning his company in debt. It describes the dramatic boardroom coup that forced Messier out and explores Messier's fascinating relationships with two prominent Americans who became his partners-Edgar Bronfman, Jr., and Barry Diller.

The first raids came at dawn in the weeks leading up to Christmas. On Thursday, December 12, 2002, fifteen police officers from the fraud squad swooped down on the headquarters of Vivendi Universal to seize computer files, documents, and e-mails. Anything that would help explain the sudden financial collapse that summer of France's best-known company was bundled into boxes and loaded into the unmarked cars lining avenue Friedland. Other units fanned out across the capital to search the two homes of Jean-Marie Messier - long familiar to readers of Paris Match - in the chic neighborhood near the parc de Monceau and in the Forest of Rambouillet, southwest of Paris.

Over the following days, in scenes that echoed events at Enron, Tyco, and WorldCom earlier in the year, the fraud squad descended on the homes and offices of some of the most illustrious figures of French capitalism, among them Marc Viénot, the seventy-four-year-old honorary chairman of Société Générale, France's second largest bank, and onetime emblem of the French business establishment. Vivendi Universal's board members, including Bernard Arnault, the billionaire founder of the Moët Hennessy-Louis Vuitton luxury goods group, and Serge Tchuruk, chairman of Alcatel, the telecommunications equipment manufacturer, all nervously anticipated the indignity of the domestic raid. The criminal investigations had started.

It seemed that with this dawn raid the crisis of corporate America had finally crossed the Atlantic. For several months after the collapse of the world's second largest media group, it appeared that the Parisian business world had successfully buried the Vivendi Universal affair. "There is no doubt in my mind that the French will do everything in their power to attempt a cover-up. The French establishment does not eat its own," cautioned Edgar Bronfman Jr., whose family lost over $5 billion when Vivendi Universal plunged into crisis in 2002. But the sudden flurry of criminal investigations and regulatory probes suggested that shareholders and employees might eventually receive a full explanation for the incredible collapse of the company.

Not since the failure a decade before of Crédit Lyonnais, the state-owned bank nicknamed "Crazy Lyonnais" for its bizarre and reckless lending, had some of the most powerful businessmen and bankers in France felt so exposed. In addition to the class-action lawsuits, Vivendi Universal was, by early 2003, in the throes of criminal probes by the U.S. Department of Justice and French prosecutors, and formal investigations by both the chief American regulatory authority, the Securities and Exchange Commission, and the main French stock market regulator, the Commission des Opérations de Bourse (COB). Piece by piece, investigators in the United States and France started to reconstruct the last three years of Jean-Marie Messier's roller-coaster ride at the helm of a dull water and sewage company that became a French media wonderstock and then took on the world.

"Anybody who either worked for the company or invested in the company should feel betrayed," said Edgar Bronfman Jr. One of the documents unearthed during the raids on Vivendi Universal's headquarters in December brazenly alluded to the fact that pressure was allegedly being brought to bear on the French investigators, who had started making preliminary inquiries in July 2002. One senior director of Vivendi Universal, Alain Marsaud, was discovered to have written a memo to Messier's successor, Jean-René Fourtou, on September 17, 2002, just two months into the COB investigation. "We should take care to ensure that the pressure on the investigators does not become a matter of public knowledge," Marsaud wrote. Vivendi Universal immediately denied interfering with the investigation, but the memo left many questions unanswered.

Two years earlier, Jean-Marie Messier had been feted as the "perfect Frenchman." Vivendi, the French water utility he had run since late 1994, had astonished the world. In a deal of startling audacity, Messier launched the largest ever French takeover of a U.S. company. The $46 billion acquisition of Seagram - owner of Universal Music, producer of one in every three albums sold worldwide, and of Universal Studios, an icon of Hollywood - was the boldest attempt by any foreign media group to challenge the American goliaths of the entertainment industry. A new media major - Vivendi Universal - was born.

For the first time, France could take pride in a global champion in the media and entertainment industry that could fight back against American cultural hegemony. In total, Messier would spend more than $100 billion in pursuit of his ambition to create the world's number one entertainment company. At its zenith, his empire would be second in size only to a then mighty AOL Time Warner. His deal-making addiction was fueled by the speculative hysteria that swept financial markets, driving media and telecom stocks to ludicrous valuations and media moguls to ever grander displays of machismo. Without his vision and personality - a strange blend of French technocratic arrogance, wanna-be Hollywood showmanship, and investment banker charm - Vivendi Universal would never have come into existence. Without Jean-Marie Messier's weaknesses - a love of deal making, self-promotion, obfuscation, and risk - the dream of a French champion might have survived.

The ramifications of the Vivendi Universal story are only just being felt. They extend far beyond the personal disaster overwhelming Messier, whose reputation as one of the most brilliant business personalities of the era has been indelibly tarnished by the failure of his project. Few receive a second chance after presiding over failure on such a grand scale. France's largest private-sector employer has survived its brush with insolvency, but only at the cost of being broken up and parceled off to the highest bidders. Vivendi Universal - as conceived by Jean-Marie Messier - has ceased to exist. Mere mention of Vivendi Universal and its fallen hero now provokes severe embarrassment within French business establishment circles. The damage done to the image of French business by his Napoleonic adventurism remains incalculable.

Vivendi Universal was far more than just a media colossus. At its peak, the empire had extended beyond traditional media into the Internet and mobile telecommunications, giving France a champion in the industries of the future. The French group had led the European charge into the new economy, launching more than one hundred Internet companies in two years, including Vizzavi, whose _1.6 billion budget made it by far the most expensive and ambitious start-up of the European Internet boom. In telecommunications, it controlled the largest private mobile operator in France and had interests in others as far afield as Kenya, Egypt, Morocco, Hungary, and Poland.

Further still from the entertainment economy, the Messier empire provided the essentials of life to hundreds of millions of homes across the world. The original water business out of which the media empire had sprung pumped water into homes and factories in more than one hundred countries and to many great cities, including Paris, London, Vancouver, and New Orleans; it also built bridges in Spain; provided pest-control services in Papua New Guinea; cleaned beaches in Australia; monitored the impact of human activity on water purity in the Chilean Antarctic; treated sewage; hauled garbage; heated homes; and managed transport systems, including Connex trains in London and the southeast of England, buses in Washington, D.C., island hoppers in the Comoro Islands, trams in Nancy, and tourist trolleys in the Alps.

As the Messier empire collapsed in 2002, its three thousand subsidiaries revealed an absurd and, in some ways, wonderful collection of assets: the Citrus Technology Centre near the Three Gorges in China that aimed to produce the perfect orange; a seven-hundred-strong chain of gift stores that dominated the U.S. market for vibrators and other "wild 'n' crazy" novelty gifts; a leaky palazzo in Venice; a brand of bottled water; the Paris Saint-Germain and Servette de Genève soccer clubs; the eighteenth-century château at Méry-sur-Oise, renovated at pharaonic cost to boast an experimental garden with a miniature rain forest, hot pools for the papyrus, and a giant igloo for the Siberian irises and arctic bramble; a town house in London; the chief executive's $17.5 million Park Avenue apartment, renovated by France's leading architect, best known for his work on the Louvre; a three-thousand-item art collection, replete with Dubuffet paintings, Miró tapestries, rare photographs, and antique drinking vessels; and a private air force that included a helicopter, a Falcon, four Gulfstreams, a Global Express, and a brand-new Airbus A319.

But the story of Vivendi Universal and its charismatic leader is about more than the hubris of one man and the breathtaking creation and collapse of an industrial and postindustrial empire. It is the perfect prism through which to examine France's ambivalence toward America and to globalization. Messier had long presented himself as an exception to the "French exception," the cherished idea that France can hold back the tide of globalization and preserve the country's distinctive economic model in the face of an encroaching ultraliberal free-market capitalism. International investors welcomed the first Frenchman to master the American-inspired mantras of shareholder value.

Copyright © 2003 Martine Orange. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.