Modish Vivendi; Can a French entrepreneur run an American film business?
How do you translate "synergy" into French? It's a nonsense word, and maybe it's a nonsense concept, too. But Jean-Marie Messier, chief executive of Vivendi, is betting his company on the dicey prospect that a transatlantic hodgepodge of European and American assets can indeed produce synergy--and make real money.</br></br>Messier yesterday delivered the formal announcement of his $34 billion mega-deal to buy the Canadian drinks and entertainment company Seagram, which owns Universal studios and Polygram records. His hope is to make the merged "Vivendi Universal" into a Paris- based media company that will play in the same monster league with AOL-Time Warner.</br></br>A comment by Messier at yesterday's press conference made it clear that one factor behind this deal is France's decades-old insecurity about the reach of America's cultural imperialism. "For the first time in Europe, there is a communication group of a size that will be able to rival all the American giants," Messier boasted. Maybe so. But many a would-be entertainment baron has stumbled in the pursuit of Hollywood's irresistibly glamorous assets. Just ask the Japanese company Matsushita, which a decade ago was seduced into buying MCA, which it later sold in frustration to Seagram, which Seagram is now selling in frustration to Vivendi. When it comes to the entertainment business, it seems, there always is one more sucker.</br></br>Even by recent standards of the merger-crazed business world, this one is a high-risk combination. It's premised on the belief that immense "scale" is essential to compete in today's economy. That remains a shaky proposition, in my book. Insiders say that even before the planned merger with AOL, Time Warner was an almost unmanageable collection of rival princes running their own fiefdoms. Add to that the difficulty of combining Paris and Hollywood--Gerard Depardieu and Julia Roberts--and you have a truly daunting challenge.</br></br>"The chance of the French succeeding in running a U.S. music and film business properly is about zero," one analyst told Reuters news service yesterday. The stock market certainly agrees with that gloomy assessment. Since news of the deal leaked last week, Vivendi's stock has fallen about 22 percent, including a 7 percent drop yesterday, according to the Associated Press. That drop reflects investors' doubts that Vivendi can make enough money from the deal to recover the premium it paid for Seagram, headed by Edgar Bronfman Jr.