Furor Over French TV Exec’s Firing

Jean-Marie Messier, chairman of Vivendi Universal, fired one of his key executives Tuesday, touching off a nationally televised war of words in France and intensifying speculation that the man who built the world’s second-largest media conglomerate is at risk of losing control of his empire.

The move triggered such controversy that France’s Socialist prime minister went on TV in support of the ousted executive. Lionel Jospin called into question Vivendi’s commitment to French cinema, alluding to growing criticism of Messier for betraying the nation’s culture by buying Los Angeles-based Universal Studios and moving his family to New York. Messier’s ouster of Pierre Lescure, the beloved chief executive of Canal Plus, Europe’s largest pay TV provider, angered the legions of followers he has amassed during a long career in television, including as a popular anchorman. Some unions and Canal Plus employees, in fact, temporarily took control of Vivendi’s own TV channel in France to protest the firing of Lescure.

The turmoil Tuesday is another setback to Vivendi’s grand ambitions to build a globalentertainment juggernaut from the merger with Universal and Canal Plus 18 months ago. In the last year, the company has lost nearly half its stock value, and some shareholders are questioning Messier’s vision to use Universal’s films and music and Canal Plus’s reach into European homes to build new wireless services worldwide.

His ability to manage the company and his staying power as head of the Paris-based conglomerate are expected to be on shareholder’s minds next week at Vivendi’s annual meeting in Paris.

Messier has been battered by the press, the financial community here and abroad and even his own board members recently for the company’s poor financial performance.

In an interview with The Times, Messier said he had no choice but to oust Lescure.

“There was a management crisis,” he said, calling Lesure unprofessional and unethical. “He needed to be loyal. He has not been. And his performance was not great. When you have neither the loyalty or the performance, where is your place in the organization?”

For his part, Lescure took up the gauntlet.

He and some of his employees interrupted Canal’s regularly scheduled program Tuesday evening to berate Messier. Lescure made a tearful appeal for support from Canal Plus staff, saying that Messier negotiated in bad faith, without following codes of governance set up by the company.

In a statement, Lescure said he was “pushed overboard.” He also said Canal Plus’ 17 years of “editorial independence and liberty are now threatened.”

Tensions with Lescure surfaced even before the complicated merger of Vivendi, Universal parent Seagram and Canal Plus. Lescure, who is considered the godfather of pay TV in France and the spiritual leader of Canal Plus, was reluctant to give up the authority he has held as CEO since 1984. He inflamed the tensions by using Canal Plus’ politically satirical puppet show, a popular French cultural fixture, to poke fun at his boss.

Messier’s habit of calling himself J2M, short for “Jean-Marie Messier, master of the world,” gave the show’s writers plenty of material.

On Tuesday, the puppets mocked Messier again, before station managers pulled the plug and switched to weather.

Messier, meanwhile, was across town on Canal’s broadcast rival station touting his new management plan.

Although Messier and Lescure tried to bury the hatchet, the truce failed to stick. With Canal Plus faltering, Messier tapped Barry Diller late last year to head up the Hollywood studio, nudging out Lescure, who had previously overseen both Canal and Universal.

A month ago, Messier gave Lescure and his second-in-command, Denis Olivennes, an ultimatum, demanding that they deliver a profit within 24 months or be fired.

In protest, Lescure sent an e-mail to Canal Plus employees saying that Messier shared responsibility for the losses because he continued to approve the company’s costly expansion outside of France. Olivennes, who had attempted to cut staff and streamline Canal Plus in his two years at the top, resigned Friday in protest.

Canal Plus is the largest pay TV operator in Europe, with more than 15 million subscribers, and is a major financial backer of the French film industry’s productions.

But unlike other Vivendi movie and music divisions, Canal Plus has been a consistent money loser, posting a loss of $439 million in 2001. The biggest drain has come from its Italian affiliate Telepiu, which has suffered from piracy, high programming costs and competition from News Corp.’s pay TV company.

Investors said the bedlam at Canal Plus on Tuesday wounds Messier. Even before Tuesday’s events, an analyst at Credit Lyonnais last week released a report saying there was a 20% chance Messier would be forced to step down.

Still, some analysts say it’s unlikely Messier will be ousted because he enjoys overall support of the board. More likely, they say, is that Messier, now chairman and CEO, may be forced to give up one of his roles.

Indeed, reports in France this week say that the influential president of insurance giant Axa is worried that Vivendi’s problems could hurt the entire French stock market and is urging Vivendi board members to rein in Messier.

Some board members also have grown impatient with Messier. Marc Vienot, a former chief executive of Societe General, recently chastised Messier for being “almost childish” in his craving for publicity.

The 45-year-old executive was toasted in Hollywood this year when he was the guest of honor at a Town Hall Los Angeles forum. Before his speech he worked the audience, walking from table to table to introduce himself to journalists and entertainment executives. He gave his stump speech about being proud to be a New Yorker and how much he loves American movies, culture and even California wine.

To seek a higher profile in the U.S., the Messier family moved into a $17-million Park Avenue apartment in New York.

His biggest worries, however, are still in France at Canal Plus. On Tuesday, Messier offered Lescure a position as chairman of the Canal Plus board in exchange for stepping down from management. Lescure refused, and within minutes, Messier called a press conference to announce Lescure’s successor, Xavier Couture, a TV veteran who runs France’s leading broadcast channel. Lescure’s ouster should have little impact on Universal since he lost control of the studio to Diller.

Lescure’s firing and the outcry that followed underscore the mounting pressure Messier is under to improve the company’s languishing stock price. “The biggest problem with Vivendi right now is that investors don’t know what they’re buying into,” said Mark Harrington, an analyst at J.P. Morgan Chase & Co.

Indeed, many investors failed to embrace Messier’s enthusiasm during the last four years for turning the country’s water and waste utility into a world-class entertainment company. In addition to spending more than $34 billion to buy Seagram and control of Canal Plus in December 2000, Messier has bought the MP3 music service, has placed a $1.5-billion bet on U.S. satellite provider EchoStar Communications Corp. and is close to completing an $11-billion acquisition of the film and television businesses of USA Networks.

Analysts have been unhappy with the huge debt burden of $16.8 billion that the acquisitions placed on Vivendi, as well as the loss posted last year by the company that was the largest in French history.

Vivendi lost $11.8 billion after write-downs on a string of the media acquisitions.

People close to the company were surprised that Couture was selected as Lescure’s successor. He is not a high-profile media executive in France and lacks experience in the complicated pay television business.

Gerard Chollet, leader of Canal Plus’ labor union, said employees would make life difficult for Couture, who is scheduled to start his new job next week, after Vivendi’s board meeting.

After meeting with board members Tuesday, Messier said he was confident they supported his management and was not in fear of losing his job.

“I’m relaxed,” he said.