The Vivendi bust: scandal in French

November 02, 2003|By Jay Hancock | Jay Hancock,Sun Staff

The Man Who Tried to Buy the World, by Jo Johnson and Martine Orange. Portfolio. 288 pages. $25.95.

For voyeurs of financial and managerial disasters, recent U.S. corporate scandals have raised the blinds on some fabulous romps.

Perhaps we are sated. What could be more entertaining than Tyco's $2,200 wastebasket, WorldCom's vanishing expense entries or Enron's rigging of the California energy market?

Here's what: The traditional venality of Wall Street -- plus the grandiosity of Hollywood. Plus the French.

Jean-Marie Messier is little known in the United States, but he deserves to be. Driven by new-economy moonshine, unencumbered by significant previous management experience, a Gallic chip on his shoulder, Messier single-handedly lost billions and billions of dollars for Vivendi Universal shareholders.

As chief of a stodgy conglomerate whose core was a water utility, Messier went on an acquisition jag that included Hollywood's Universal Studios, the Seagram drinks enterprise, Barry Diller's USA Networks and various publishers. He also spent lavishly on mobile-phone and Internet services.

As is usual in these accounts, the hubris and mania are stunning, only with a different accent. What's especially wonderful for American readers is the dirigiste, state-run backdrop of the French economy and Messier's comical attempts to break out of it and run with the likes of Jack Welch and Ted Turner.

He got significant aspects of American capitalism right. He gave himself big compensation. He set up lavish offices in New York. The company paid for a sumptuous Manhattan abode. He kept his directors in the dark. He discounted his failures and fantasized about corporate synergies and soaring revenue.

How does one say "Dilbert" in French?

Unfortunately for Messier and Vivendi Universal shareholders, he apparently forgot that stock value depends on profit, not volume, and that even good businesses can get too expensive. Vivendi came close to bankruptcy in the summer of 2002, when a somnolent, nationalistic board finally woke up and booted him. Law-enforcement authorities on both sides of the Atlantic are investigating.

It's hard to pick the book's best episode. Maybe it's when Messier, as a government-connected banker, assumes the chairmanship of what would become Vivendi after gaining supervisory experience that basically included only directing a secretary. Perhaps it's when the politically protected programmers at Canal Plus, Vivendi's French pay-TV arm, rebel over an executive's ouster, lambaste Messier on air and urge watchers to cancel their subscriptions.

Maybe it's when Messier borrows barrows-full of money, pushing the company ever closer to insolvency, to support a bloated Vivendi share price -- and his own stock options.

Co-author Jo Johnson is a writer for the Financial Times of London; her partner, Martine Orange, works for the left-leaning Le Monde of Paris. They covered the Vivendi implosion and so brought intimate knowledge of their subject to their book deal, which helps explain the appearance of The Man Who Tried to Buy the World only a little more than a year after Messier received his pink slip.

They probably go too easy on Edgar Bronfman Jr., the Seagram heir whose misjudgment of Messier and fascination with Hollywood has caused significant harm to the family fortune. Bronfman, a key source for the book, sold Seagram and its Universal arm to Messier and became perhaps the Frenchman's biggest victim. On second thought, perhaps Bronfman deserves a little sympathy.

Jay Hancock is a financial columnist for The Sun. He was The Sun's diplomatic correspondent from 1999 to 2001 and its economic correspondent from 1995 to 1999. He has twice been a finalist for the Gerald Loeb Award for business and financial journalism.

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