Vivendi Chief Driven by Thirst for Global Power

Vivendi, the French company now in parleys to become the newest owner of a major Hollywood studio, got its start nearly a century and a half ago in an improbably different line of work: slaking Parisians’ thirst for drinking water.

But in the last four years, under a brilliant and hard-driving chairman, Jean-Marie Messier, the staid and sleepy utility of yesteryear has morphed into a European powerhouse in communications, multimedia and the Internet.

Vivendi now owns a 49% share of Canal Plus, Europe’s largest pay-television company, with nearly 15 million subscribers in France, Spain, Italy, the Benelux countries, Scandinavia and the French-speaking nations of Africa. It owns the second-largest telephone company in France and the country’s largest publisher and Internet service provider.

“Compared to the American telecommunications companies, we are midgets,” Messier has often reminded co-workers, one Vivendi executive reported Wednesday. “So we have to be quicker and more imaginative.”

Nicknamed “Master of the World,” in grudging admiration for his grandiose and often fulfilled plans, the 43-year-old Messier has dreamed out loud of becoming the Gallic equivalent of CNN founder Ted Turner. Now the native of Grenoble in the French Alps and the conglomerate he controls are poised to acquire Seagram Co., parent of Universal Studios, one of Hollywood’s venerable dream factories.

Analysts said the deal makes superb sense for Vivendi--and is completely in keeping with Messier’s grand ambitions.

“From Vivendi’s view, it’s consistent with the desire of global companies to expand their influence to the United States,” said Barry Hyman, an analyst at Ehrenkrantz King Nussbaum in New York. “What you get in Seagram is a burgeoning global music division and an underappreciated film division.”

For Vivendi, that means a lot more content to peddle over its various media outlets, including Canal Plus and the Internet. Like the AOL-Time Warner merger announced Jan. 10, Hyman said, a Vivendi-Seagram marriage would mean “consolidation of distribution and contents under one roof.”

Two months ago, Canal Plus founded its own movie production company, StudioCanal. But acquiring Universal would bring to the mix a well-established, if somewhat faded, Hollywood institution, one responsible, among other productions, for Steven Spielberg’s “Jurassic Park” and “Schindler’s List.” It would be the realization of Canal Plus chief Pierre Lescure’s longtime dream: to build “a major European studio of world dimensions.”

Ironically, it is the French in Western Europe who rail the loudest about the invasion of the Continent’s movie and TV screens by films and programming made in the United States. And now, analysts said, the entertainment assets of Seagram are all Vivendi really wants. If the deal is concluded, they predicted, the Montreal-based company’s liquor brands will be quickly sold off.

As it prepares to launch a new type of multi-access Internet portal, Vizzavi, due to begin service in France on Monday, Vivendi is also short on musical content to attract and keep customers. Purchasing Seagram would bring recordings by top-selling Eminem, Limp Bizkit, Dr. Dre and the other artists signed to Universal Music, Europe’s No. 1 music company.

“The logic of all this is simple,” said Olivier Moral, a financial analyst with Handelsbanken Markets in Paris. “Seagram in media owns an important catalog of movies, plus a catalog of music. As far as music is concerned, the audio content was what was lacking for Canal Plus and Vivendi’s future portal, Vizzavi.”

That new gateway is designed to allow access to the Internet from home computers--but also from cellular telephones and television.

“You might have a phone that will let you watch a movie, or get your e-mail on your TV,” Vivendi spokesman Antoine Lefort said. Vivendi estimates the potential market at 70 million Europeans, encompassing subscribers to Canal Plus, Vivendi’s cellular customers and those of British-based Vodafone AirTouch, with which Messier concluded a strategic alliance in January.

Poised and coolly confident, with innocent, boyish looks that one writer from the Agence France-Presse news agency likened to those of a youngster about to receive communion, Messier is a member of a singular French breed: a highly educated civil servant who, like Renault Chairman Louis Schweitzer, has flourished in the rough-and-tumble world of international capitalism.

“When our chairman took the lead, we were basically an environmental services company,” one Vivendi official said Wednesday, speaking on condition of anonymity. “He was the first in France to see the importance of the convergence strategy [in multimedia, information technology and the Internet].”

Under the impetus of Messier, the Vivendi official said, “we decided to operate AOL France. We bought Havas, the top publisher in France. We bought software companies in the United States, including Sierra and Blizzard.”

Originally named Compagnie Generale des Eaux, Vivendi traces its origin to 1853, when a member of the French nobility was granted a 50-year concession by Emperor Napoleon III to provide drinking water for the city of Paris. Until Messier took the reins in 1996, the company had kept to providing humdrum, if essential, services such as water, sewage treatment and garbage removal to municipalities in France.

According to Moral, the Paris-based analyst, 25.6% of Vivendi’s 1999 revenues still come from water, versus 20.5% for telecommunications and audiovisual services.

Schooled at the prestigious Ecole Polytechnique and National School of Administration to become one of the “mandarins” who run the machinery of the state, Messier at 29 was named the youngest chief of staff of a French government ministry in modern times.

In 1986, as a civil servant, he played a major role in the privatization of state-owned companies, and in the process he met many of the country’s most influential industrialists and business leaders. In 1988, at 32, he entered Lazard Bank as the youngest managing associate in its history.

It was there that the longtime boss of Generale des Eaux, Guy Dejouany, would seek him out to become his designated successor in the autumn of 1994.

As a reflection of his dreams, and their globe-girdling scope, Messier changed the name of the company in 1998. It was the chairman himself who choose Vivendi--an appellation both more international than the old French name, and one whose root lay in the Latin word for “life.”

Father of five children, and amateur pilot, skier and tennis player in his spare time, Messier’s composure and wariness are the stuff of folklore in Paris business circles.

Last summer, Vivendi’s stock price was buffeted as analysts questioned his “unbounded ambitions.” The chairman kept to his game plan, which the Paris daily Le Monde on Wednesday night summed up in a phrase: “to be a global player in communications.”

Earlier this year, Vivendi cut itself in two. Vivendi Environment, which includes the world’s biggest water company, as well as waste treatment, energy and transport businesses, was saddled with most of the debt. That left the other unit, Vivendi Communications, freer to expand.

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Bloomberg News was used in compiling this report.