Vivendi chief faces protests

Messier's strategy is likely to come under fire from shareholders

PARIS, France (CNN) -- Under-fire media chief Jean-Marie Messier faced a barrage of protesters and angry shareholders at Vivendi Universal's annual meeting.

But Vivendi's improved first-quarter partial results could help Messier ride the storm of protest.

Messier is under pressure for sacking Pierre Lescure, the influential and popular boss of French broadcaster Canal Plus, and for the poor performance of Vivendi stock.

Riot police stood guard as shareholders walked through a crowd of angry demonstrators from Canal Plus, Vivendi's pay television unit.

They wore T-shirts that said "Messier mega liar," and many shareholders joined in calls for his resignation, frustrated at the company's falling share price, huge 2001 net loss, and unclear strategy.

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Even as some in his audience booed Messier told shareholders: "Our strategy makes sense. Everybody knows it takes time to build something, especially something radically new. Is it a challenge? Sure. But it's a challenge we are about to win."

Before the meeting at a 5,000-seat concert venue on the outskirts of Paris, the company posted a higher than expected rise in first quarter earnings before interest, taxes, depreciation and amortisation -- thanks to strong gains in its telecoms and film business.

EBITDA in the company's media and communications business rose 16 percent to 1.171 billion euros, as revenue climbed 12 percent to 7.109 billion euros. Analysts polled by Reuters had been expecting EBITDA of 1.07 billion euros and sales of 6.48 billion.

Vivendi also said it now expected its debt to be less than three times as large as annual EBITDA by the end of the year. In March, the company has said debt would "not exceed'' three times EBITDA.

Messier is accused of watering down French culture with his American style of management. He lives in a $17 million Manhattan flat and works in New York, and his critics say he is too removed from the French cultural roots of Vivendi Universal and Canal Plus, Europe's biggest pay-TV operator.

Canal Plus has made a loss for the last five years. But it is strongly identified with producing French programmes, sport and music, as well as helping to fund French cinema.

Messier has transformed Vivendi Universal from a water utility to a media conglomerate. In June 2000 it paid $46 billion for Canada's Seagram -- with assets like Universal Studios and Universal Music -- and Canal Plus.

He also spent billions of euros on music Web site MP3.com, publisher Houghton Mifflin, the entertainment assets of USA Networks and a stake in U.S. satellite company Echo Star.

His supporters hope he can blend his assets and raise profits. But many investors remain unconvinced.

"We sold our shares in Vivendi a couple of weeks ago," Rohini Rathour, European strategist at Sarasin Investment Management, told CNN. "They have a lot of nice assets but we can not see how they can make them work together."

Since Messier began his spending spree began two years ago, the stock has plunged 70 percent. This year alone it has lost more than a third of its value. On Wednesday, the stock slipped 1.3 percent to 38.42 euros.

Rathour believes Messier's decision to remove key executives could strengthen his hand as he attempts to sell the company to investors as a more international-focused company.

"Canal Plus has always been a problem child," said Rathour. "Messier would like the company to be more Hollywood-focused, while the French are keen to see it sporting local language films and programmes."