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CNN PINNACLE
Interview With Vivendi Universal CEO Jean-Marie Messier
Aired February 17, 2002 - 18:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
WILLOW BAY, HOST: Making waves in Hollywood, and trying to win over Wall Street, deal by deal.
JEAN-MARIE MESSIER, CHAIRMAN & CEO, VIVENDI UNIVERSAL: When you're #2, you have only one dream.
BAY: His dream, a truly global media empire, the biggest in the world.
BAY (on camera): You would like Vivendi Universal to be the #1?
MESSIER: I think that's all chance by being already global, we are ahead of the competition.
BAY: Jean-Marie Messier, Chairman and CEO of Vivendi Universal on this edition of PINNACLE.
ANNOUNCER: This is PINNACLE, with Willow Bay.
(COMMERCIAL BREAK)
BAY (voice-over): He's an all-star CEO in France, with a nickname that hints at his global ambition, J6M, from the French for Jean-Marie Messier, myself, master of the world. Today he's the master of a universe of his own creation, Vivendi Universal, the second largest media company in the world.
(on camera): And the vision, as you would articulate it, for Vivendi Universal is?
MESSIER: Just to be the global leader of content provider, direct access to consumers on every single kind of platform.
BAY (voice-over): What is unusual is not Messier's desire to be #1, but the story of how he got to be #2, by transforming what he calls a "sleepy old lady," a giant water company, into a sexy international media star.
In 1996, he was named CEO of Company Generale des Eaux, the largest water and waste management services firm in the world. But Messier saw what he believed was key to the company's future, a handful of entertainment and communications assets the company also owned. He would focus his efforts on two areas of growth, environmental services and communications.
BAY (on camera): Your strategy was essentially to sell off assets that didn't fit into either one of those two categories and use that money to essentially fund the growth of a communications business?
MESSIER: Not only selling assets to buy other assets, it was also to create new business and to be running them, and when we were buying assets to turn them around.
BAY (voice over): It was an enormous taking. Milk the cash cow, the water business, to build a media giant deal by deal. With Canal Plus a French pay television operation telecom and publishing units, Messier had some key elements in place but they were all in France, hardly the center of the media universe.
(on camera): You decided that a new vision, yours, needed a new name. Why?
MESSIER: Because competition was just reflecting our businesses and the choice to procure some media and communications here, and it was too French a name. How do you pronounce Compagnie Generale des Eaux in Chinese, in Russian, in Spanish. It was not possible.
So we made the choice of Vivendi, just because that's a fun name. That's a very dynamic name, and we tested the name in several languages, and in several cultures.
BAY (voice over): But even with a fancy new name, he was still running a water company. On January of 2000, Messier got a wakeup call.
BAY (on camera): You were moving along a path, executing your vision, and all of a sudden as 2000 begins, AOL and Time Warner merge.
MESSIER: Yes, huge announcement.
BAY: Huge.
MESSIER: Very huge. I do remember the day. I really made a series of phone calls to say, "OK look, that's what we believed in. That the convergence between the content and the distribution area. That's the strength of the Internet and they are right."
BAY (voice over): So Messier got moving, six months later announcing a mega deal of his own.
UNIDENTIFIED MALE: I'm very, very happy to join with Jean-Marie in creating this new company and very happy to introduce him to all of you. Jean-Marie Messier.
BAY: In June of 2000, he bought Seagrams from the Brothman (ph) family for $34 billion. He merged Universal's music group, TV and film studios, theme parks, and a 40 percent stake in Barry Diller's USA Networks with his European properties, to create Vivendi Universal.
BAY (on camera): What is the philosophy behind combining these two companies?
MESSIER: That's very simple. We want to be worldwide leader in they key context we are operating in. That's music, movies, games and education. By achieving this merger, we are giving to Vivendi Universal clear #1 or #2 worldwide positions in those businesses, and then to help the distribution of those contents whereas owing some properties on the distribution side, based on what we see as the most promising technologies of the digital age, which in my view are interaction television and wireless technologies. That's what Vivendi Universal is about.
BAY (voice over): The deal would catapult Vivendi into the ranks of the largest and most powerful media companies in the world, and make Mr. Messier a media mogul, a role he's been playing with great flair ever since.
MESSIER: We needed to act and not to remain a small competitor, vis-a-vis giants like AOL Time Warner, and I think that's what the merger with Seagram and the creation of Vivendi Universal achieved at the very end of the same year.
BAY (on camera): At the very least a strong #2.
MESSIER: You know, when you are #2, you have only one dream.
BAY: You would like Vivendi Universal to be the #1?
MESSIER: I think that our chance is that we are already global. I do believe that the media world will not remain only (UNINTELLIGIBLE). By being (UNINTELLIGIBLE) we are ahead of the competition, including AOL Time Warner from that point of view. That's a huge advantage for us.
BAY (voice over): In the wake of the deal, Wall Street was buzzing, but there was plenty of criticism. Global conglomerates had tried to run entertainment companies before and failed, but Messier insisted he would break the patter.
MESSIER: I think that there is one area that you have to avoid, that's to be the French coming in to Hollywood being very proud and trying to manage the U.S. studios. U.S. studios have to be managed in L.A. by U.S. professionals.
BAY: Vivendi Universal now had plenty of content, but without a television network, lacked a way to distribute that content in the U.S. But Messier made it clear, he wasn't finished. In December of 2001, he made a few more moves.
He invested $1.5 billion in satellite TV provider EchoStar Communications Corp. and in another deal that month, acquired USA Network's cable channel and TV studio for $10.3 billion. He merged it with Vivendi Universal and talked Barry Diller into running it as CEO of Vivendi Entertainment. Messier had done more than acquire a significant television presence in the U.S. He had hired a powerful and respected media executive with real clout on Wall Street. The mogul had signed on a mogul of his own.
MESSIER: There is a great deal of respect and trust between the two of us, and respect is based on recognition of talent, and I think that the role of the game between us is very simple. Our relationship is based on total reciprocal freedom. No commitment on his side. No commitment on my side. We will work together with Barry Diller, as long as we have fun together, and I think that with video entertainment, we can have fun for many, many years.
BAY: With breathtaking speed, Messier has built the world's second largest media and entertainment conglomerate, and he still runs that old water company too.
So how did a boy from the tiny town of Grenoble take Hollywood by storm, when PINNACLE returns.
(COMMERCIAL BREAK)
MESSIER: I think that I learned skiing before I learned walking.
BAY: Jean-Marie Messier grew up in this snowy French city of Grenoble. What kind of childhood did you have? What did your parents expect of you?
MESSIER: I think they were not expecting anything on the professional side. I think that they tried to convey to me two simple qualities that I am trying to give to my children too. The first one is named tolerance, which is not the passive quality. That's active action for respect and (UNINTELLIGIBLE). And the second one is enthusiasm, and I think that's not so bad, because with tolerance and enthusiasm, I think that you can face any situation in your life.
BAY: You were educated in some of France's finest schools, so clearly you were a good student.
MESSIER: I had this chance, but I was not only a good student. I think that I was a student who was interested by things outside of the world of histories.
BAY: In 1979, Messier graduated from Ecole Polytechnique. He sent a job application to the oil company Totale (ph) hoping they'd pay his tuition at Harvard Business School. But a handwriting analysis kept him out. What happened?
MESSIER: I was trying to get some help to finance an MBA at the Harvard Business School and there was an analysis of my handwritten letter, whose conclusion was terrible. This guy has no ambition. He's not (UNINTELLIGIBLE) to act in business. He's better as a civil servant. Do not hire him.
BAY: Have you worked on your handwriting since then?
MESSIER: No. I kept it, but now I see that as a conclusion. I never rely on handwritten analysis to hire someone.
BAY: Instead, Messier entered Ecole Nationale de Administracion, a school known as a stepping-stone to a career in the French government. A student thesis landed him a groundbreaking job.
MESSIER: With a few friends, we wrote a book relating to privatization in foreign countries, and the idea was no politics. We are just going to explain to you what has worked, what didn't work. And one day, I received a call from the Minister of Finance telling me, "OK, you have made very interesting studies of what has gone on outside. Are you ready to come in to join and to do it in France?"
BAY: At the age of 29, Messier joined the Finance Ministry. His assignment, the first privatizations of state companies in French history. To this day, he's considered a business rebel in France. Did leading the privatization program, the very first, mean you were somewhat unpopular in certain quarters?
MESSIER: I don't know if I was unpopular or popular. It was strange for many French people. It was also a wonderful success in terms of (UNINTELLIGIBLE). It was one of the main focus of this first privatization to make millions of French people becoming shareholders of businesses and learning about the markets, and for me the best experience that I got through this privatization assignment was full understanding of the international finance world and the international market world.
BAY: Next stop on Messier's world tour, the prestigious investment bank Lazard Freres. In 1989, he moved to New York, to become one of the firm's youngest partners.
MESSIER: I learned a lot about my American partners, and this has been of great help for me.
BAY (on camera): Is it also where you further developed your ability to be able to pick apart a balance sheet?
MESSIER: (UNINTELLIGIBLE).
BAY: Were you naturally inclined in that way?
MESSIER: Yes, but what I was the most interested in was trying the way of negotiations and understanding the strategy of the main U.S. corporate groups.
BAY (voice-over): One corporate group in particular noticed. Gui de Giuani (ph), the President of Generale des Eaux recruited Messier in 1994, and in less than two years, Messier was running the largest water services utility in France.
(on camera): Why did they turn to you?
MESSIER: My predecessor, I think that he liked the risk, choosing the young guy who has no managerial experience, half of his age, was certainly a risk and a time of provocation vis-a-vis the French establishment and he liked that. But also the fact that he perfectly realized that this group added tremendous potential, but that it had to be managed in a different way.
BAY: Today, Messier still runs France's biggest utility, the Vivendi environment, but along with it the Vivendi Universal, the media company that embraces his vision of the future. When PINNACLE returns, going global by acting local.
(COMMERCIAL BREAK)
MESSIER: When people are speaking about cultural gap between exotic Frenchmen and U.S. people, that's bullshit.
BAY: Why?
MESSIER: Because when you are between professionals, that you are sharing the same vision, the same passion to make just the largest hit and to reach and to satisfy the largest number of customers, we are speaking the same language.
BAY: So if this doesn't work, it's not working because you're a French guy coming in and taking over this place?
MESSIER: No, it's not because of my heavy French accent.
MESSIER: I want to give you my very special and warm thanks to all the artists.
BAY (voice over): With a heavy French accent and boundless enthusiasm, Messier crosses continents and cultures, preaching the message of content, music, movies, television, as a bridge across the world's great cultural divide.
He is a man at home in many worlds, on center stage, before the world's most powerful political and business leaders; with the characters at Universal Theme Park in Los Angeles; on the streets of his new hometown of New York City.
MESSIER: I needed to spend most of my time in this country, and why New York and not L.A.? When you manage from L.A. to Paris, New York in terms of time difference is the easiest way to manage the global group.
BAY: Three hours on one side, six hours on the other?
MESSIER: Yes.
BAY (voice over): On September 2nd, Messier, his wife Antoinette, and their five children, moved from Paris to Park Avenue. Just nine days later, as the family was getting settled in their new home, the city was devastated by the worst terrorist attack in U.S. history.
MESSIER: Being confronted to those eight days (UNINTELLIGIBLE), you may say OK what's happened to the family? In fact, I've seen that we have been strengthened by those (UNINTELLIGIBLE), because I think that I had no idea of how truly strong we as a family, we would heal, as moving to America and as New Yorkers. (UNINTELLIGIBLE), we all feel really American and really New Yorker. We worked several years on integration and dedication to this country and to New York. We were happy to move to New York. We are proud of being New Yorkers.
BAY: From a business perspective, why did you move to New York?
MESSIER: Moving to New York, yes there was very simple reasons. The first one Vivendi Universal has 50,000 U.S. employees. They have a boss. Where is the boss? The boss is in the U.S. He's working there. I can meet with them. I can spend time with them. He is really the boss.
The second goal was Vivendi International is a new group for many U.S. investors in the media field. We need and I needed to spend more time with the U.S. Universal community to explain the Vivendi Universal story, to go through all reasons of performances of prospects, and I think that it's just better to do it being an American, than being outside.
BAY: Mr. Messier still has plenty of explaining to do. Investors are clearly skeptical. The stock has dropped more than 40 percent in the past 12 months, tumbling around 25 percent since January of this year.
Still in February, the company reported 10 percent revenue growth for 2001. Meeting the ambitious growth targets Messier promised in what was for all media companies a difficult year.
But as Wall Street wonders if this CEO was perhaps blinded by Hollywood's bright lights, Messier is clear. The business of entertainment is Vivendi's future.
MESSIER: You can be fascinated by the (UNINTELLIGIBLE) in this room. That's a tremendously attractive industry. I'm not fascinated by show biz for show biz. Show biz is first business, and my role as CEO of Vivendi Universal is to grow the value and the cash flow from my shoulders.
So this is more important than show, even from a personal basis. I like looking at shows.
BAY: And this is a show everyone else is watching too. Jean- Marie Messier, chairman and CEO, Vivendi Universal, on this edition of PINNACLE.
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