It is as if God placed upon the earth these tools--movie studios, television networks, telephone companies, record labels, cable companies, Internet providers--and then stood back and waited for silly mortals to figure out how they all fit together. Last week's talk of a $35 billion purchase of Canada's Seagram by France's Vivendi represents the latest human attempt to make some of these pieces click into a seamless, revenue-generating new-economy Tinkertoy. The toy boys in this deal, Vivendi CEO Jean-Marie Messier, 43, and Seagram CEO Edgar Bronfman Jr., 45, can't resist the urge to merge Vivendi's telephone company, Internet provider and cable system with Seagram's Universal Studios and Universal Music Group.
The idea here is similar to what compelled Viacom to buy CBS and AOL to merge with Time Warner: joining content with distribution. In some sense, it is technology--or fear of technological change--that is driving these partnerships. Who knows in the high-speed, always-on, wireless world what is more valuable: content or distribution, programming or cable, music or the means to get the tunes to the listener?
The real convergence in this deal would be the alliance of Universal's vast film and recorded music holdings with Vivendi's sprawling Internet, pay-TV and software-publishing properties. Classics from Universal's library of 24,000 TV episodes and more than 3,000 films, including such blockbusters as E.T. and Jurassic Park, could run on Vivendi's majority-controlled Canal Plus subscription-TV service, the Continent's largest. And Seagram's Universal music group, currently the biggest on earth, could deliver Limp Bizkit and Sting to millions of European households via Vivendi's 50%-controlled Vizzavi Internet portal. Such synergies will be enshrined forever--or at least until the next deal--in the proposed name of the merged colossus: Vivendi Universal.
The head of this new media power, Vivendi's Messier, is a former civil servant who has undergone a new-economy makeover. When he took over the firm four years ago, it was primarily a water-and-waste management operator--who needs that kind of boring stuff in the new economy? Since then, he has been reconfiguring the company through a flurry of mergers and asset sales, shifting the product flow from water pipes to fat data pipes. After this deal goes through, he will probably spin off the remaining hydro assets to concentrate on whether or not he should green-light Erin Brockovich Deux or make Enrique Iglesias available in MPtrois format.
The merged Seagram, based in Montreal, would also shed some assets, bidding adieu to its wine and liquor empire, which features brands like Captain Morgan rum and Chivas Regal Scotch and could fetch anywhere from $5 billion to $10 billion. Bottled spirits are much too ancien regime--and besides, you can't download rum. The likely buyer: Britain's Allied Domecq.
News of the talks follows hard on the heels of the mother of all such connections, the proposed $113 billion marriage of America Online and Time Warner, whose holdings include this magazine. And as in a Vivendi-Seagram deal, these hookups increasingly reach across borders. Last month Spain's Terra Networks, an Internet provider, agreed to pay $12.5 billion for the U.S. portal Lycos; the German media giant Bertelsmann will also be a partner.