Vivendi Universal: In a Strategic Flux

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Themes: Corporate Restructuring
Period : 1996 - 2003
Organization : Vivendi Universal
Pub Date : 2003
Countries : France
Industry : Media & Entertainment

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Case Code : BSTR054
Case Length : 17 Pages
Price: Rs. 500;

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Background Note Contd...

TABLE I
A BRIEF NOTE ON AGENCE HAVAS

Agence Havas (Havas) was started as a news and advertising agency in 1835 by Charles-Louis Havas. The advertising business flourished over the next decade and the company went public in 1879. In 1920, Havas was merged with the Société Générale des Annonces advertising agency. As the business grew, political interference in it increased. Consequently, Havas' news service was nationalized as the Office Français d'Information (later named as Agence Française de Presse) by the French legislature in 1940. The advertising arm of Havas was renamed the Havas Couseil in 1958. After two decades, Havas Couseil was reconstituted as Eurocom holding company. In 1982, Eurocom was listed in Paris as a Havas Media Group subsidiary.

Source: Adapted from www.ketupa.net.

CGE expanded into the telecommunication and media businesses by establishing Société Française de Radiotéléphone (SFR) in 1987, which became one of France's largest wireless operators. SFR was also the first company to introduce the GSM³ service in the country in 1992. During the same year, the French government sold its stake in Havas to CGE. In 1988, CGE acquired the France-based global construction group Société Générale d'Enterprises. By 1990, the company crossed the 100 billion French Francs (FRF) mark as its sales revenues doubled from 53 billion FRF in 1987 to 117 billion FRF in 1990.⁴

In 1992, the company expanded its water and utility services to United States (Hawaii), Asia, Australia (Sydney) and Latin America. By now, CGE's diversified portfolio of businesses had established the company's credentials as a rapidly emerging global corporate giant. However, things changed when Messier joined as the CEO of the group in 1994. Messier, who succeeded Guy Dejouany (CGE's CEO since 1976), immediately put the company on a shaky path of large-scale changes.

Vivendi under Messier

In 1996, CGE's consolidated sales stood at 166 billion FRF, of which 51 billion FRF was generated outside France. In the same year, CGE established Cegetel, to provide telecommunication services in France. The SFR mobile service business was also made a part of Cegetel. Messier started this company anticipating the deregulation of the French telecommunication market on January 1, 1998. Cegetel went on to become the country's leading private telecommunications operator in both fixed as well as mobile telephony services.

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3] www.iec.org defines Global System for Mobile communication (GSM) as a globally accepted standard for digital cellular communication. GSM is the name of a standardization group established in 1982 to create a common European mobile telephone standard that would formulate specifications for a pan-European mobile cellular radio system.

4] In 1990, 5.44668 French Francs (yearly average as per www.chartflow.com) equaled 1 US $. The currency was withdrawn from circulation after the introduction of the Euro.