Parlez-vous Universal?

French media giant Vivendi takes over Universal Pictures. Cue the Jerry Lewis flicks?

Published June 22, 2000 7:00PM (EDT)

Universal Pictures, the venerable home of such enduring Americana as Frankenstein, Rock Hudson, Jaws and E.T., has fallen to the French. Will movies ever be the same?

Tuesday was a day for post-coital ceremonies -- press conference in Paris; a quick hop on the Concorde; a second dog-and-pony show in Manhattan followed by ingratiating phone calls to increasingly dubious financial analysts. After weeks of rumors, Jean-Marie Messier, chairman of Vivendi S.A., the French water utility turned telecommunication giant, officially embraced Edgar Bronfman Jr., president and CEO of the Seagram Company. Together, the pair will parent a complicated $34 billion international baby called Vivendi Universal.

Meanwhile, back in Hollywood, the folks at Universal Pictures, which is owned by Seagram, were doing their best to practice a casual Gallic shrug. After all, movie studios are accustomed to playing the fancy chit in high-stakes global poker.

In 1991, the Japanese electronics giant Matsushita -- driven by a need to acquire a movie library to push its VCRs -- bought what was then called MCA Universal from its aging founder Lew Wasserman for $6.9 billion.

Four years later, Hollywood's Byzantine ways having flummoxed the Japanese, they sold to the eager Bronfman for $5.7 billion. Bronfman went on to transform the company -- slashing away its executive ranks, selling most of its TV operations to Barry Diller's USA Network and then augmenting its music holdings by buying Polygram NV last year for another $10.4 billion.

Under Bronfman's watch Universal has grown, but its motion-picture division has shrunk in importance. It accounts for just 10 percent of Seagram's value (according to Bronfman); its standing in the new mega-company is likely to shrink even further, since the Vivendi/Universal merger is actually a complicated three-way deal.

Vivendi also owns 49 percent of the French pay-TV giant Canal Plus. As part of the deal, it's acquiring the remaining 51 percent. Canal, in turn, already owns its own motion picture production company, Studio Canal.

Universal Pictures, once the engine that powered the whole company, appears to have been reduced to another cog in the corporate wheel. Still, reaction at the studio's San Fernando Valley headquarters was measured. Many at the studio are adopting a cautious, wait-and-see attitude. "Actually, I sense the word at Universal is quite positive," said director Jonathan Mostow, whose recent feature, the submarine thriller "U-571," proved a spring hit for the studio, grossing $74 million to date.

With Canal Plus having already picked up some of the foreign distribution rights to his film, Mostow added, "I've met a lot of the players and I like them a lot. They want to be in the movie business and that's a great thing. They're not newcomers making toaster ovens. They understand that it would be a mistake to install non-Americans to run film operations and they don't seem to have any intention of doing that. Hollywood is a place where outsiders who don't understand the culture can be eaten for lunch."

The merger's effect on the studio is "a non-issue," adds Paine Webber analyst Chris Dixon. "They've already indicated they've seen a lot of people go to Hollywood and get drawn and quartered. I anticipate they'll rely on management that's well-known and comfortable in the Hollywood milieu. I don't view a major change in the operation."

Certainly, Messier was doing his best to assuage nervous Americans. "No little Frenchies are going to run a Hollywood studio," he vowed Tuesday.

But takeovers almost always involve wrenching executive turnover -- no matter how much esprit their executives muster. Speculation has already begun. Here are a few scripts. Take your pick:

  • The laissez-faire scenario: Messier keeps his word. As vice chairman of the mega-company, Bronfman plans to oversee music (his first love) and the Internet, washing his hands of any involvement in motion pictures. The film studio is overseen by Pierre Lescure, chairman of Canal Plus; Lescure serves as CEO of the new company, but remains in Paris -- as promised -- and leaves Hollywood alone.

    (Lescure is actually far from an unknown quantity in Hollywood, where Canal Plus already has a few dozen deals in place. In the early '90s, Canal Plus lost a bundle backing high-flying Carolco Pictures, which hit it big with "Terminator 2: Judgment Day" before swan-diving into flops like "Cutthroat Island" and eventually going bankrupt. Undaunted, Canal Plus has since struck up deals all over town: It has a 50/50 co-financing arrangement with Universal that supports London-based Working Title Films, which turned out hits like Julia Roberts' "Notting Hill." Along with Warner Bros., it co-funds Bel Air Entertainment, responsible for Kevin Costner's "Message in a Bottle" and Keanu Reeves' August release, "The Replacements." And it's got a slew of distribution deals with companies like Spyglass Entertainment, producers of recent movies like "Keeping the Faith" and "Shanghai Noon." In fact, without Canal Plus' involvement, movies like the upcoming "Captain Correlli's Mandolin," a World War II romance starring Nicolas Cage and Penelope Cruz, might never have fallen into place. In addition, just about every movie made in France bears Canal Plus' signature. "They're a monopoly over there," says one producer who has dealt with the company. "It's as if HBO made every single movie over here -- no French movie gets made without them. And they've also built an extremely profitable and effective business in investing in and distributing American movies."

    Eager to assure his new American colleagues that they won't be pressured into, say, casting Gerard Depardieu in favor of Brad Pitt, Lescure argued that Studio Canal and Universal Pictures will be complementary, not competitive. There's been no word on his feeling on the Jerry Lewis oeuvre though, in a delicious irony, Universal, which released Eddie Murphy's remake of "The Nutty Professor" and is about to unleash its sequel, has been enriching Lewis for years. "European films will go through Studio Canal; big-budget U.S. films that we co-finance will go through Universal's pipeline," he promised.

    But before you assume it's all going to be Beaujolais and roses, consider another possibility.

  • The au revoir, mes amis scenario: From his distant pied-`-terre on the Seine, Lescure could easily reach out and shake up Universal. Ron Meyer, the former Creative Artists Agency president who took over as Universal's president and COO in 1995, looks the most vulnerable. Asked about Meyer's role in the new combine at Tuesday's New York press conference, Lescure responded diplomatically: "When you look at his career, his experience, his expertise, both as an agent and a studio executive, you realize he is of great value," he said. "I hope he will decide to stay with us." Then he added: it's "his personal decision."

    Whispers around town have Terry Semel, former Warner Bros. co-chairman turned free agent, in line to take over. "From what I'm hearing, Ron is history," observed Porter Bibb, managing director of the New York merchant bank Technology Partners. "The word is they've been talking to Terry and he's at liberty right now. Ron is just not seen as a very strong manager."

    Meyer himself was not commenting, but one Universal insider responded, "All the talk of Terry Semel is ridiculous. He might have been close to the French folks. He might have been a proponent of them hooking up in the first place. But the studio has already got strong management and [the Vivendi executives] have indicated they have nothing but respect for it."

    Though Meyer and company have indeed engineered something of a turnaround in the past year -- hits like "The Mummy," "American Pie" and "Erin Brockovitch" have been box-office reanimators -- one should never underestimate the temptation any new owner feels to impose his own controls. Meyer, whose current contract runs for more than five years, could well find himself with a golden parachute.

    And Meyer could be just the first to go. Take the scenario a step further: By hedging its bets and investing in pictures throughout Hollywood, as it's already done, Canal Plus could even decide Universal Pictures is an expensive indulgence it doesn't really need. After all, it's already got lots of product coming from other suppliers. Instead of pumping in more money, it could end up further tightening the studio's purse strings. "Universal could become even more risk-averse than it already is," says one observer with close ties to the studio.

    And, if that scenario were to play itself out, there would only be one response: As the French say, C'est la vie.

  • By Gregg Kilday

    Gregg Kilday, a writer in Los Angeles, writes regularly about the movie business.

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