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Abstract:
In late 1984, Andre Rousselet created the first encrypted Pay TV in France and Europe with the help of Generale des Eaux, a French public limited company (leader in waste-water management) and Havas Media Group. In 1994, Pierre Lescure took over as CEO (Chief Executive Officer) after being the blue-eyed boy of Rousselet for the past ten years. Canal Plus, with an increasing number of subscribers, was the undisputed market leader with no visible signs of competition. Between 1996 and 2000, Jean-Marie Messier, CEO of Generale des Eaux, formed Vivendi Universal that boasted businesses in music, publishing, TV and film (Canal Plus, Universal Pictures, Universal Studios), entertainment parks, telecom (Cegetel and SFR - two major mobile operators in France) and the Internet with a controlling stake in Canal Plus. By 2002, when the Internet bubble had burst, the telecom market had crashed, and economic slow down had crept in the US and Europe, Vivendi Universal's debt level had reached 13 billion euros and its stock price had decreased by 80%. In 2002, Jean-Marie Messier was ousted by the board of Vivendi Universal and Jean-Rene Fourtou was ushered in as the new CEO. Canal Plus in 2002 had a net debt of 5.1 billion euros despite a turnover of 4.8 billion euros, and a net loss of 325 million euros. Fourtou immediately appointed new top-management in Canal Plus with Bertrand Meheut, as the new CEO. The case describes the successful financial and organisational restructuring of Canal Plus in a record 18 months and raises key issues about: (1) alignment of strategy, human resources and control in the organisational restructuring process; (2) challenges of the TV industry; and (3) managing business in a highly volatile technology driven industry. A video '305-446-3' is available to accompany this case.
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