In order to understand this turbulent and strange episode in the history of American-European media business relations, it is best to go back to the roots of Vivendi and its predecessor CGE. Founded in 1853, the Compagnie Generate des Eaux (CGE) began as a civil engineering and utilities (water) company. In the 19th and 20th centuries, CGE grew into a stable multinational  player with an  impressive workforce all over Europe and  with  interests  in energy,  transport, construction, and communications. In the 1980s and 1990s, CGE increased its interests in the media and communication sector with new major activities in the fields of television (mainly through the establishment in 1983 of the Canal I pay TV group), telecom  (e.g., in Poland and Cegetel, the second largest operator in France), publishing, and advertising. In the meantime it also developed a similar acquisition policy in vari­ous other fields, such as transportation (e.g., Scandi­navia, New Zealand). When in 1998 CGE finally controlled Havas, the powerful French conglomerate with major activities in the world of publishing, advertising, and news services, the group became known as Vivendi.
     By 2000, when Vivendi's chief executive Jean­ Marie Messier turned his attention to Seagram, Vivendi had become an ambitious and (for some observers) voracious player in various businesses, with an increased interest in the media and communications sectors. Similar to CGE/Vivendi, Seagram had moved from its original core business (beverages) into a wider area with increasing media-oriented activities. Especially since the mid- 1990s, the Bronfman family (major stakeholders in Seagram) had increased its interests in several communications sectors, mainly through acquisitions in the publishing (e.g., Putnam Berkley in 1996), television, music, and film industries. A historical deal occurred in 1995, when Seagram bought MCA from Matsushita for $5.7 billion, renaming it Universal. This deal was considered at the time as a major loss for the Japanese corporation and manufacturer of audiovisual hardware brands such as Panasonic and JVC, because it had acquired MCA/Universal only five years earlier for a record bid of $6.9 billion. Another important transaction, putting Seagram in the forefront of the global cultural industry, dealt with the $10.4 billion acquisition of Philips' software arm Poly­ gram in 1998.

     From this perspective, the 2000 deal to buy Seagram for $34 billion fully illustrated Messier's aggressive policy and megalomaniac vision. At the time of Sea­ gram's acquisition, French and Western European news media wholeheartedly welcomed the creation of the new group, named Vivendi Universal (VU) and headquartered in Paris. Through this merger, the corporation became the world's leading music company, while it possessed the second largest film library and controlled an impressive network of theme parks. VU also increased its control in the audiovisual (film and television) production and distribution field, as well as in the publishing, advertising, Internet, and telecom sectors. At the same time, Messier decided to concentrate more fully on these communications and media activities, gradually  selling  off  Vivendi's other (new) interests, such as those in the beverages business.

     However, Messier's position ran into conflicts with major stakeholders such as Edgar Bronfman Jr., the former chairman of Seagram, while its breakneck expansion strategy soon proved to be financially disastrous. In two years time, VU had an overall debt of 19 billion euro. The Messier saga ended in the summer of 2002, when he was fired and replaced by Jean-Rene Fourtou. The new chief executive immediately announced that he would focus on diminishing the company's debt and remove those departments within the corporation currently losing revenue.

cccccFirst, Fourtou decided to sell a major part of Vivendi Environnement, the older engineering and services arm, reducing Vivendi's part in it from 63 to 40.8 per­ cent. Second, Vivendi Publishing, one of the major publishing corporations in the world, was put up for sale, and acquired by the French publisher Lagardere. Other publishing companies, such as Houghton Mif­flin, were sold to a consortium of U.S. investors. Many other parts of the VU empire were displayed for sale, including several European cable channels such as the Italian Telepiu.

cccccIn the midst of this intense selling campaign, VU ur­gently needed more investment to retain its majority stake of 70 percent in Cegetel, which had grown into one of the world's leading mobile phone companies. While Fourtou first claimed that VU's American media and communications branch (Vivendi Universal Entertainment) was not for sale, he decided by April 2003 to dismantle VU's activities in the United States. After a turbulent summer of bidding and exchanges, VU en­tered exclusive talks with General Electric's NBC over the formation of a new company, to be called NBC Universal. The new company. with an estimated value of $43 billion, is now owned 80 percent by GE and 20 percent by VU.

cccccThis merger, which illustrates once more the intensity of globalization and concentration tendencies in today's communications sector. creates another world leader with many assets, to sit alongside Time-Warner, Viacom, Disney, and News Corp. For Fourtou, who claimed that VU might soon change its name, the deal with GE constituted an important step in consolidating VU's media and communications interests and in making it a profitable company again. For NBC, the merger created a link to one of the major film studios and its impressive library.