Reined-In, Vivendi's Messier Survives

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Vivendi Universal SA chairman Jean-Marie Messier appeared to dodge a bullet last week, but concerns over the company's stock price and Messier's acquisitive style forced Vivendi's board of directors to form a committee that some feel was created to rein in the sometimes flamboyant executive.

Messier has been under fire for months over a series of miscues, with some board members and large shareholders calling for his ouster in the French press. While Messier managed to retain his management position, the board, at an all-day meeting in New York May 29, moved to form a corporate governance committee co-chaired by Vivendi vice chairman Edgar Bronfman and Marc Vienot, chairman of Vivendi's audit committee.

The company did not reveal who else would be on the board or clarify exactly what the board would do. In a press release, Vivendi said only that the committee's mission will be "putting forward new measures based on best international practices in this domain."

Bronfman, who sold his Seagram Ltd.'s Universal Studios to Vivendi in 2000 for $30 billion in stock, owns about 6 percent of Vivendi's outstanding shares.

According to the release, the committee was proposed by Messier himself, and could have been a concession to heavy criticism in the past few months regarding his management style.

Sanford Bernstein & Co. media analyst Michael Nathanson said the committee's creation was likely a move by the board to rein in Messier. But, because of the unique makeup of Vivendi, he said that Messier's job is safe — at least for now.

"He [Messier] has been too much of a one-man show," Nathanson said. "But there probably is no one else who can run this company. They have a hodge-podge of holdings."

Once a stodgy French water utility, Messier transformed Vivendi into a media and communications giant with film and television holdings in the United States and France. But Messier assembled those assets — including Universal Studios and the remaining interest in USA Networks cable programming assets — at high prices. That, coupled with an overall downturn in the economy, has forced Vivendi's stock price to decline more than 40 percent this year.

"The stock has fallen, but it's not at a place where it's so low that he [Messier] has to be fired," Nathanson added. "In my mind this is not a disaster."

Messier also appeared to stave off pressure to split the company into separate telecom and entertainment companies, although Nathanson said a spin-off of the entertainment assets is still a possibility down the road.

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