The Rise and Fall of Vivendi Universal's Jean Marie Messier


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Case Details:

Case Code : LDEN015
Case Length : 11 Pages
Period : 1996-2002
Pub Date : 2003
Teaching Note :Not Available
Organization : Vivendi Universal
Industry : Media and Entertainment Countries : France

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Messier's stellar rise and catastrophic fall has grabbed headlines all over France and attracted other authors, most of whom agree he became a victim of his own arrogance and addiction to deal-making without thinking fully of the consequences."

- David Litterick, Messier Book Blames Everyone but Himself, www.telegraph.co.uk, November 15, 2002.

"No doubt the company (Vivendi Universal) would never have existed if not for his vision, but critics within the company called him arrogant and cagey."

- Tim Spira, Integrated Media Conglomerates go Pear Shaped, www.ml.mny.co.za, November 18, 2002.

An Unceremonious Departure

On July 1, 2002, Jean Marie Messier (Messier) the CEO of the France-based Vivendi Universal (VU), the world's second largest media conglomerate, resigned from his post. The resignation came after the debt strapped company's board unanimously asked him to quit.

The board accused Messier of, among other things, causing an 80% decline in the company's market value. Industry Analysts and the company's shareholders also held Messier responsible for VU's problems. The company had posted losses of € 13.6 billion1 in 2001 and accumulated debts of € 15.7 billion – most of which were due to the asset write down of the companies Messier had purchased.

 Messier's departure attracted a lot of attention in corporate circles across the world. Industry observers were surprised over how the markets had turned hostile towards a leader they had themselves lauded a couple of years ago. Messier had once been called one of the biggest dealmakers in Europe for having turned a sleeping water and utilities giant into a huge media company.

Elie Cohen, a French economist, said,2 "VU has always been about, by and for Messier – which worked as long as markets believed in the man. When the stock declined and Messier proved incapable of reversing it, that's when market perceptions, Messier's reputation and VU itself crumbled." While many critics believed that Messier was the victim of his own excessively ambitious plans, there were many who said that his fall was a simple case of ignoring the risk of overexposure. Some analysts claimed that his inclination towards the American style of management coupled with his views regarding the French way of running businesses had made the French media and political establishment turn against him, precipitating his downfall.

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1]  May 2003 exchange rate, $ 1.1712 = 1 €.

2]  As stated in the article 'The Old Guards Revenge' dated July 15, 2002 at www.time.com.

 

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