• Tech

The Old Guard’s Revenge

4 minute read

Had French business titan Jean-Marie Messier been a footballer, he might not be suffering disgrace and joblessness today. Last month, after France’s World Cup humiliation, President Jacques Chirac advised disgruntled fans against turning on their beloved Bleus — warning “we mustn’t burn today what we considered beautiful yesterday.” Messier wasn’t so lucky. Though once regarded as a national hero for turning a sleepy French water company into the world’s second-largest media group, Vivendi Universal, Messier saw his corporate reign come to an ignoble end last week as the stock market and the French media, business and cultural élite — and even the Elysée itself — converged to oust him.

In France, Messier’s name is now close to dirt — which also approximates Vivendi Universal’s stock price. Shares have dropped around 70% since the start of the year and nearly 40% in the week of Messier’s eviction. “Vivendi Universal has always been about, by and for Messier — which worked as long as markets believed in the man,” says economist Elie Cohen. “When the stock declined and Messier proved incapable of reversing it, that’s when market perceptions, Messier’s reputation and Vivendi itself crumbled.”

The assembly of Vivendi Universal through one billion-dollar deal after another enhanced Messier’s reputation as the bright, brash future of European business. In championing the marriage of entertainment and technology — and by ostentatiously embracing American business practices and cultural tastes — Messier marketed himself as a new brand of global CEO. His appetite for media attention, meanwhile, offered a refreshing change from France’s older generation of clubby, secretive business chieftains. But Messier ignored the risk of over-exposure, and his hamming soon generated jealousy, resentment and disdain in France. His Americanophilia also rankled, especially after he moved to a $17.5 million Park Avenue apartment and poked a U.S. flag pin in his lapel. In December, when Messier announced yet another U.S. acquisition and pronounced “the French cultural exception” dead, his country’s media and political establishment turned against him.

Messier further alienated his countrymen by publicly firing Pierre Lescure, long-time president of subsidiary Canal Plus, just weeks after giving Lescure two years to reverse the pay TV station’s losses. The move provoked open rebellion by the channel’s staff and increasing suspicion that Messier was preparing austerity measures to include slashing Canal Plus’ funding of French cinema — thus ending its central role in preserving the cultural exception he had declared dead.

Messier certainly had reason to economize. In March Vivendi revealed 2001 losses of €13.6 — the largest in French history — mostly due to a €15.7 billion write-down of companies purchased before the high-tech bubble burst. And the financial news just kept getting worse. Despite asset sales and desperate accounting ploys, concerns over the servicing and payment of Vivendi’s €30 billion group debt last week led Moody’s to rate Vivendi Universal bonds as junk and sent share prices tumbling ever further. Inexplicably, Messier fell silent when panicked investors needed to hear from him most.

Ultimately, Messier was undone by the very French old guard he considered obsolete. The nation’s business establishment — led by the doyen of French industry, Claude Bébéar — lobbied for his ouster. That behind-the-scenes intrigue reportedly got decisive support from Chirac advisers like Jérôme Monod — a former official at Vivendi’s French rival Suez. Their view that Messier would bankrupt his corporate creation — discrediting the entire Paris Bourse in the process — was pressed upon Chirac allies on Vivendi’s board, and down went Messier.

Replacing him is Jean-René Fourtou, the non-executive vice chairman of Franco-German pharmaceutical giant Aventis and respected baron of French business. Staid, solid and focused on getting Vivendi past its liquidity crunch, Fourtou will also likely sell off some Vivendi assets and establish a tighter, slimmer industrial strategy. That’s not exactly the “think big” spirit that made Messier a star, but it should be music to the market’s ears.

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