Vivendi Universal: In a Strategic Flux|Business Strategy|Case Study|Case Studies

Vivendi Universal: In a Strategic Flux

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Case Details:

Case Code : BSTR054
Case Length : 17 Pages
Period : 1996 - 2003
Organization : Vivendi Universal
Pub Date : 2003
Teaching Note :Not Available
Countries : France
Industry : Media & Entertainment

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Beginning of the End

In March 2002, VU reported a loss of € 13.6 billion. These losses were mainly attributed to the € 15.7 billion written down for the companies purchased before the dotcom bubble burst (Refer Exhibit III for the list of companies acquired during the dotcom boom).

The company's financial troubles were aggravated by Messier's statements in the French media suggesting that the 'French Cultural Exception was dead.' This sent shock waves throughout France since the concept of 'Cultural Exception' was very dear to the French people . Messier's statements were seen as an attempt to limit/stop Canal Plus' association with the French film industry. Since Canal Plus was a key player in shaping the French film industry over the years (by financing movies as well as by buying their broadcasting rights), Messier's stand was unacceptable to many French nationals. Criticism of Messier intensified when he sacked Pierre Lescure, the popular CEO of the loss-making Canal Plus...

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Mending The Mistakes

In order to restore investor confidence, the company appointed new members like Claude Bebear, popular politician and chairman of the Axa insurance group, and Henri Lachmann, head of Schneider Electric.

The company's new chairman Jean-Rene Fourtou (Fourtou), former deputy Chairman of Aventis drugs company, began a major restructuring of the group's businesses. Fourtou appointed Goldman Sachs Bank to monitor the company's worsening cash flow problems. He began discussions with VU's creditors to plan out new credit facilities. Fourtou also entered into negotiations with two banks, Société Générale and BNP Paribas, to obtain new loans for the company. The company had also reportedly approached other institutions like Rothschild, Citigroup's Salomon Smith Barney, Lehman Brothers Holdings, Deutsche Bank, Credit Suisse First Boston, JP Morgan Chase, Merrill Lynch, Morgan Stanley and UBS Warburg to help it restructure its debts...

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

History Repeating Itself?

In November 2002, news reports stated that VU was trying to raise money to buy British Telecom's (BT) 26% stake in Cegetel (VU held a 44% stake in Cegetel while Vodafone held 15%). Analysts felt that VU was committing a major mistake by planning to spend £ 2.5 billion to thwart rival Vodafone's attempts to buy Cegetel (Vodafone had earlier made a £ 2.5 billion bid for the BT stake and had offered £ 4.3 billion for VU's stake...


Exhibit I: VU - Various Businesses
Exhibit II: Vivendi - Key Financials (1996-2000)
Exhibit III: Major Acquisitions Made by Messier
Exhibit IV: VU - Consolidated Statements of Income
Exhibit V: VU - Condensed Consolidated Cash Flow Statements
Exhibit VI: VU - Condensed Consolidated Balance Sheets
Exhibit VII: VU - Actual Operating Income by Business Segment

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