Final scene in a French farce

VIVENDI Universal seems to have turned itself into one of its disaster movies. In a plot more far-fetched than anything dreamed up by its Universal Studios, the Franco-American media-to-waste-disposal conglomerate has imploded in an orgy of losses, sackings, staff protests and political condemnation.

The climax will come on Wednesday when the French TV regulator decides whether to withdraw its broadcasting licence and shareholders rally in Paris for the group's annual meeting.

The story so far: in the closing years of the last century, Jean-Marie Messier, a suave and outspoken businessman of unparalleled self confidence, became chairman of a boring French water and waste utility called Generale des Eaux. In a series of breathtaking deals applauded by the nationalistic French establishment he used it as a cash cow to build a global media group. He switched its communications base to New York, courted US analysts and started to deride the foibles of the nation that had given birth to him and his company.

Then the slide in corporate valuations from last autumn stripped bare the clay foundations of the edifice he had constructed. Last month, Vivendi Universal unveiled the biggest corporate loss in French history - a e13.6bn(£8.4bn) splurge of red ink. Never mind that the figure was struck out after e15.2bn of goodwill write-downs and that the operating income from VU's e57.4bn turnover was e3.79bn. Its e19bn debt, illuminated by US accounting rules, were too high, but the assets, though their value had fallen, remained sound.

Under pressure from investors and a sliding share price, J2M, as he is nicknamed, moved to rebuild his balance sheet and cut costs. He announced his desire to sell down VU's stake in the separately-quoted waste and water company from which it sprang, Vivendi Environnement, from 64% to less than 50%.

His next, even more controversial target was Canal Plus, the pay-TV station that is a pillar in the French battle against perceived US cultural imperialism. It has debts of e5bn and last year lost e700m before goodwill. J2M sacked the managing director, quarrelled with its founder chairman, one-time journalist Pierre Lescure, then sacked him.

The French establishment, which had lauded Messier to the heavens, was furious at the betrayal. Cinema greats Johnny Depp, Catherine Deneuve and David Lynch sent Lescure messages of support, 1,000 Canal Plus employees roared their disapproval outside VU's Paris HQ and several non-executive directors of Canal Plus plan to oppose the sacking. Meantime, France's broadcasting supervisor, the CSA, launched a hearing into whether the station'slicence terms had been breached. Canal Plus invested e145m in the French film industry last year, a quarter of total industry investment.

Then, inquisitive business paper Les Echos discovered option agreements that could cost VU hundreds of millions of euros if it cut its Vivendi Environnement stake to get VE debts off its balance sheet and bring in cash. It also emerged J2M had more than doubled his salary to some e2m.

But as protest mounted, so did the share price. Vincent Bollore, an astute speculator, snapped up 0.5%. Messier, moving equally quickly, announced the e1.2bn sale on Thursday of VU's professional publishing arm to venture capitalists Cinven, Carlyle and Apax.

Meantime Claude Bebear, chair of VU's supervisory board, seemed to want to clip Messier's wings. Investors are betting a chastened Messier will win his boardroom battles, complete his disposal programme and exert financial discipline. Or that a less-flamboyant successor will do so if he goes.