The rise and fall of Jean- Marie Messier’s debt-ridden media empire is an old story in Hollywood, but the company’s shareholders are still smarting over their losses.
A jury in U.S. District Court in Manhattan offered them some consolation Friday, finding that Paris-based Vivendi misled investors about the company’s financial health from 2000 to 2002.
The federal jury found the company liable on all 57 counts of violating U.S. securities laws stemming from one of several class-action lawsuits brought by angry shareholders. The jury did not award any damages, which will be determined after shareholders file claims.
Vivendi transformed itself from a water utility into a media and telecommunications giant, scooping up Universal Studios and other properties that saddled the company with a crippling $77-billion debt and caused its stock price to plummet.
Vivendi said in a statement that it would appeal the decision. “Vivendi believed, and continues to believe strongly, that it did nothing wrong and that this case raises significant legal issues for foreign corporations doing business in the United States that need to be definitively resolved.”
Messier, the company’s former chief executive, was not found liable by the jury; neither was the company’s finance chief, Guillaume Hannezo. Messier testified that he did not mislead investors and that Vivendi’s stock price was hurt by various events beyond his control, including a tightening in debt markets. In 2003, Vivendi agreed to pay $50 million to the Securities and Exchange Commission to settle fraud charges. Messier paid a $1-million fine.
In 2003, Vivendi sold the bulk of its Universal properties to General Electric Co., but retained 20% ownership in the newly formed NBC Universal group. The company recently announced plans to sell its remaining stake in Universal Studios to General Electric for $5.8 billion. That transaction helped clear the way for cable giant Comcast Corp.'s deal to buy a majority stake in NBC Universal.
Vivendi also owns Universal Music Group, the world’s largest music company.