Yoke’s on Messier

Bronfman panel to oversee Viv U governance

They didn’t grease up a guillotine, but Jean-Marie was fitted for handcuffs.

Against a backdrop of speculation of a palace revolt, embattled Vivendi Universal chief Jean-Marie Messier remained firmly in place atop the Paris-based conglom Wednesday after a tense boardroom face-off.

But company directors did vote to create a “corporate governance committee” co-chaired by former Universal topper Edgar Bronfman Jr., who is understood to have been critical of some of Messier’s moves.

Bronfman headed Universal before the Vivendi acquisition and was criticized for pursuing too conservative a course.

The Viv U board met in New York, where Messier now makes his home, but several directors participated by remote video link from France.

A Vivendi spokeswoman declined to say whether the board — as expected — also voted to reduce the conglom’s stake in Vivendi Environment, a Viv U subsid containing the nearly 150-year-old French water utility Messier morphed into a global media giant.

Wall Streeters said Vivendi might not want to signal how much of its Viv Environment stake it intends to sell for fear of undermining its negotiating position.

There was apparently lots of board talk about debt reduction, and a sell-off of even a portion of Viv U’s current 63% stake in Viv Environment would help a lot toward that cause. The creation of the corporate governance committee — additionally co-chaired by Viv U chairman Marc Vienot — appears also to be tied to such concerns.

“They’re putting limitations on Messier’s ability to freelance in acquisitions and other areas,” said analyst Harold Vogel of Vogel Capital Management in New York.

Corporate governance is a hot issue in these post-Enron days, so the move to create such a committee at Viv U is not shocking in itself.

“But Messier has been on a buying spree and raised up the debt level to a point that’s not easy to service,” Vogel said. “So, that’s why he’s seeing an oversight committee move in.”

The good news for Messier is that “there probably won’t be any actual management changes at this point,” he added.

No do-over

In other business, the Viv U board decided against re-staging conglom’s annual shareholders meeting.

Concerns over possible vote tampering arose after the first such confab, but a Paris court recently confirmed all of the vote results from the meeting. Among other actions, shareholders nixed an expensive exec stock-option plan at the meeting.

Bronfman’s family remains 5% stakeholders in Viv U, and Edgar Jr. holds a board seat. In December 2000, Bronfman’s Seagram Co. sold Universal Studios and other businesses to Vivendi, with Viv simultaneously acquiring European pay TV group Canal Plus.

The transaction was aimed at building a media powerhouse with worldwide operations in film, TV and music that would wow Wall Street and woo investors from around the globe. What happened was a 55% plummet by Viv U shares.

The stock inched up 5¢ to $31.57 on the New York Stock Exchange on Wednesday.

Viv U debt totals $30 billion, with $16 billion of that coming from media holdings and $14 billion tied to the Viv Environment unit. A lot of the media-side debt is traceable to the $40 billion acquisition of Seagram and Canal Plus, so Wall Street knew the conglom would be bearing a big debt load for some time.

But with that level of corporate “leverage,” conglom-watchers haven’t been shy about questioning some subsequent pricey moves.

The $2.2 billion acquisition of book publisher Houghton Mifflin in June has drawn wide criticism, but even more costly was December’s $12 billion buy of film and TV ops at Barry Diller’s USA Networks.

The drumbeat of criticism grew to a din in April when Messier ousted Canal Plus boss Pierre Lescure, a well-known and respected European media vet. Messier even found himself dodging brickbats from French presidential candidates, who suggested Lescure’s dismissal undermined a pledge that Viv U would protect French culture from homogenizing American influences at the conglom.

Interim step?

Viv U didn’t detail what role its corporate governance committee will play, other than to state the body was charged with “the mission of putting forward new measures based on best international practices in his domain.”

But, generally speaking, such committees make recommendations about matters such as exec compensation and balance-sheet management as opposed to supervising actual business operations or assisting on corporate strategy.

Viv U tried to counter any perception that the committee would impede top management at the conglom by further stating in its press release it was Messier who had proposed its creation.

But the immediate reaction in some other quarters was that the topper was fortunate to have escaped even more draconian measures — at least for now.

“You have to wonder if this was just an interim step and further management changes might be in store down the road,” Gerard Klauer Mattison’s Jeffrey Logsdon said.

(Jill Goldsmith in New York contributed to this report.)