|Sunday, June 25th, 2000
Seizing opportunity in old-economy biz
Jean-Marie Messier took over a water utility company. In the water pipes to millions of French homes, he saw new opportunities and forged ahead into the media industry.
He was only 37 years old. And he had dared to ask for a salary of 15 million franc (S$3.7 million), higher than that of the native record-holder Pierre Suard, then head of Alcatel Alsthom, and Jacques Calvet, head of Peugeot.
Calvet criticised the brash young hun's ""youth'' and ""inexperience'' publicly, adding for good measure: ""The only thing Messier has run has been his secretary''.
So Messier accepted a more modest 6-million-franc salary, but that would double in no time. He was certainly no pushover. By the time he went on board CGE, he had already built up an impressive track record, not to mention his academic pedigree (a graduate of both the Ecole Polytechnique, training ground for the business elite, and the Ecole Nationale d'Administration, the academy for civil servants).
But he was, from the start, a rebel. He joined the Treasury, and began bucking the system. In 1986, at 29, he began advising the Finance Ministry on privatisation programmes.
When these wound down two years later, he turned down all offers of top bureaucratic jobs, and joined investment bank Lazard Freres instead. He was the youngest partner in the bank's history.
CGE, founded in 1853, was the most hidebound and provincial of all French industrial groups, and although it was the largest distributor of water in the world, with 2,200 subsidiaries in just about every business, it had also got itself into a mess. And its real estate portfolio was draining off its cash.
But in the mess, Messier saw his great opportunity to transform an old-economy company by going after newly-deregulated high-growth markets.
He was made the CEO in 1996, by which time he had despatched off 14 of the groups's 29 operational heads quietly and bloodlessly.
In the water pipes going into millions of French homes, Messier saw direct access to customers of new businesses. While others talked of a metaphorical pipeline into people's home, like a TV cable, he had a real pipeline. Why not add a digital pipe to one of metal and concrete?
So he invested in building a telephone network as an alternative to France Telecom's monopoly. With that network, he opened up a whole new world of business opportunities.
Over the next few years, as the staid French utilities industry watched in disbelief, Messier took his company aggressively into the media and entertainment businesses.
He upped his company's stock in Canal +, the pay TV service which now reaches into 14 million households. He bought over French publishing house Havas, and transformed it into the world's leading maker of educational and entertainment software.
He also expanded across Europe in a series of takeovers and investments.
Along the way, in 1997, he changed the company's name from General Water to Vivendi, a word derived from the latin word, ""to live''. It connotes more of a lifestyle focus.
Until last week, Vivendi was Europe's second-largest media and entertainment company, after Bertlesmann.
On Tuesday, it became the world's second biggest, after America Online's pending merger with Time Warner, when it announced that it would acquire the Canadian drinks and entertainment company Seagram, owner of Universal Studios and Polygram Records, for US$34 million (S$58.8 million) in stocks.
Universal's latest hits include American Pie and Erin Brokovich. Polygram is the largest music company in the world.
The new trans-Atlantic outfit, to be called Vivendi Universal, aims to deliver entertainment, information, music and all other kinds of content onto the next generation of screens: Mobile phones, computers, cable TV and tomorrow's portable devices.
Already, the naysayers are calling Messier a sucker. Matsushita had lost a bundle when it bought over MCA, the parent of Universal, and Seagram didn't exactly have a good run with the Hollywood studio. Also, the combined company is expected to sell off those fuddy-duddy old-economy assets that have actually been making good money all these years.
Seagram looks set to sell off its spirits business, which includes such labels as Absolut Vodka, Chivas Regal and Martell. Vivendi may dispose of its water and waste-management business.
But the liquor business accounted for 67 per cent of Seagram's cash flow, and the water-utility arm provided 69 per cent of Vivendi's earnings last year, the naysayers point out.
Will Vivendi-Universal end up as just an expensive pipe-dream for Messier?
But this Frenchman is looking ahead.
And he's wily. He can even outfox an old fox like Rupert Murdoch. When a proposed merger between Canal + and the latter's BSkyB fell through last year, Messier went through the back door, upping his company's shareholding in BSkyB by buying into three British companies which have stakes in BSkyB.
Now he has made a reluctant partner out of Murdoch -- the two networks will work together to create the next generation of digital TV.
Meanwhile, as he said at the launch of Vivendi's new Web portal Vizzavi under a big top along the Siene last Wednesday, ""One thing's for sure, we're going to have a lot of fun''.
25/06/00 Seizing opportunity in old-economy biz