Vivendi Universal: In a Strategic Flux



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

VU's origins can be traced back to 1853, when the Compagnie Générale des Eaux (CGE) was established as a joint stock company by the French government in Paris as a civil engineering and utilities company. CGE was founded with two main objectives: to irrigate land for cultivation and to supply drinking water to the cities of France. The company began operations by supplying water to the city of Lyon. In 1854 the company began supplying water to Nantes and in 1860 to Paris.

Inspired by the success of the utilities business, CGE's services were expanded to various places in the years to come. CGE expanded its operations to other countries by supplying water to Venice in 1880 (this was the company's first international contract). CGE was awarded utility contracts to supply water to the cities of Istanbul (1882) and Porto (1883). By 1953, CGE, which had a utility network of ten thousand kilometers, supplied drinking water to eight million people in France. Over the next two decades, CGE further strengthened its utility services business by offering district heating services and waste disposal (in 1967) by setting up plants for domestic waste disposal (for composting as well as heating purposes).

In 1972, CGE ventured into the real estate promotion business by constructing an office complex, la Défens, in Paris. By 1976, CGE's business portfolio included construction and energy besides utilities, contributing 28%, 12% and 48% of the company's total sales respectively. The acquisition of Compagnie Generale de Chauffe in 1980 transformed CGE into the largest private energy group in France.

Subsequently, in 1980's, the company also acquired Omnium de Traitement Et de Valorisation (OTV), a water management company, and Compagnie Générale d'Entreprise Automobiles (CGEA), a transportation and waste management company. In 1983, CGE and the Agence Havas media group (Refer Table I for a brief note on Agence Havas) together established Canal Plus, the first ever pay television (TV) channel2 in France. CGE held a 15% stake in the new company.

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2] Unlike TV channels that come as a package deal for customers paying monthly cable TV charges, Pay TV channels are ‘sold’ separately to viewers. Broadcasting companies are paid directly by the viewers and the latter can pick and select the channels they want to watch.