Vivendi's stock price kept sliding, and by the end of July, the media giant—once worth a hundred billion—had dwindled to a market value of just 10.1 billion euros!
Sure, a company with assets this massive can't be judged solely by market value.
But for Vivendi, the real kicker was Moody's credit rating.
A low rating spelled serious trouble for Vivendi's bonds, stocks, and loans. A dip in stock value was one thing, but if the bonds took a hit and major investment banks and securities firms started demanding repayment, Vivendi could be pushed straight into bankruptcy.
To climb back to a BAA-level rating, Vivendi's debt couldn't exceed 10 billion euros.
In other words, they needed to wipe out roughly 20 billion euros in debt!
When Dunn Pictures came knocking with an acquisition offer, Vivendi's board didn't hesitate to greenlight it. Talks began over the assets in Vivendi's entertainment division.
The board, though, played it cautious. They stuck to big-picture strategy, leaving the nitty-gritty for the new CEO to handle once they were in place.
By early August, Pirates' League: Curse of the Black Pearl had been in theaters for nearly a month.
In North America, it raked in $250 million at the box office. Overseas, where it rolled out later, it pulled in $190 million.
Comparing Pirates' League to Spider-Man 2, which had already crossed $1.1 billion, wasn't exactly fair.
This was, after all, the first chapter of an original story.
Still, under the helm of big-shot director Tim Burton, the series was off to a strong start.
Based on box office trends, Pirates' League: Curse of the Black Pearl was projected to surpass $300 million in North America and hit around $400 million overseas.
No question about it—this would be the highest-grossing film Tim Burton had ever directed!
On August 2, Dunn Pictures dropped another blockbuster: Signs, directed by M. Night Shyamalan and starring Mel Gibson, hit North American theaters.
That same day, Vivendi's board dropped a bombshell—they'd appointed 47-year-old Jean-Bernard Lévy as Vivendi's new CEO.
Lévy's first order of business? Sit down with Dunn Pictures to tackle the company's towering debt and pull Vivendi back from the brink.
Dunn himself hopped a flight to Paris to personally congratulate Lévy on his new role and have a quick chat about the asset acquisition.
They met at Lévy's home, where his wife whipped up dinner.
"Vivendi's got a lot of challenges right now, Mr. Lévy. Any bright ideas?" Dunn asked, taking a bite of caviar. It was… underwhelming.
Lévy's English was crisp. He shook his head. "Restart the books, control costs bit by bit, cut expenses. No magic bullet."
"At least Dunn Pictures can help you weather the storm, right?" Dunn grinned as Lévy's wife brought over a bowl of soup. "Thank you, Mrs. Lévy. This dinner's amazing—I'm really feeling that French hospitality."
Lévy paused, then said slowly, "The board's decided to pull out of the film and entertainment business, especially in the U.S. I agree with them."
"Oh?" Dunn sensed there was more to that.
Lévy continued, "Vivendi's got over 2,600 subsidiaries. Their structures are all over the place. Trying to tie them into one strategy? Next to impossible."
Dunn caught his drift.
Vivendi's operations spanned the globe, but three big players dominated: Universal Pictures, Universal Music, and Mifflin Publishing.
Those three alone had over 1,100 subsidiaries worldwide, with more than 30,000 employees—70% of Vivendi's total workforce.
If Lévy wanted to trim costs, he'd have to offload those assets.
Dunn kept his tone casual. "I'm actually more curious about Blizzard and Sierra. Those game studios? They're the stuff of my generation's childhood in America. Universal Music and Mifflin Publishing, though—no offense, but music and publishing are fading industries."
Lévy chuckled. "Mr. Walker, everyone knows you've got your sights set on Universal Pictures."
Dunn's expression cooled. "So you think you've got me cornered?"
Lévy stayed unruffled. "Just business as usual."
Dunn shrugged, took a sip of soup, and nearly gagged but kept his face steady. "If I don't land Universal Pictures, I'll cut all ties between Dunn Pictures and Universal. If you know anything about Hollywood, you know Dunn Pictures is already cozying up to Disney for a string of deals."
That wasn't just talk.
Dunn had a backup plan ready.
If Vivendi tried to play hardball with Universal Pictures, Dunn wouldn't budge. He'd pivot straight to Disney.
With Dunn Pictures' potential, Disney's shareholders would be thrilled at the prospect of a merger.
Sure, a Dunn Pictures-Disney merger would dilute Dunn's shares, but he'd still hold maybe 25% of the new company, right?
Enough to call the shots.
Lévy looked surprised by Dunn's words.
Luckily, he'd done his homework before taking the job. He knew his first task would be dealing with Dunn and had dug into the guy's background. Dunn's business style? Aggressive and intense.
You couldn't push him too far.
Lévy smiled. "Negotiations, right? We've both got room to maneuver. You want Universal Pictures, and we're open to selling."
Dunn shook his head. "Universal Pictures is one thing, but I want to talk about Blizzard."
Lévy looked uneasy. "Blizzard… you know, their new game, Warcraft III: The Frozen Throne, hits next year. Plus, they've already kicked off work on an online game. We can't sell Blizzard right now."
Dunn wasn't fazed. "Nothing's impossible, Mr. Lévy. You're not thinking I'll just take on the music and publishing baggage while you hold onto a gem like Blizzard, are you? This is a deal—both sides need balance."
Lévy's eyes narrowed.
Dunn pressed on. "Back in the day, Sony and Panasonic tried breaking into Hollywood. Both took huge losses. The Japanese couldn't hack it in Hollywood, and the French aren't faring much better."
Lévy laughed lightly. "Universal Pictures has been doing pretty well lately."
Dunn was half-amused, half-exasperated. "That's because Dunn Pictures is Universal's partner! Just Spider-Man and Unsinkable netted Universal a hundred million bucks!"
Lévy nodded. "I've got no issue selling Universal Pictures to you—the board's on board too! The problem is, I want to offload Universal Music and Mifflin Publishing, but you're after Blizzard, which I don't want to let go."
Dunn set down his knife and fork, gesturing broadly. "Forget Blizzard for now. Let's skip Mifflin too. Let's talk TV networks. Vivendi's got two big ones: Canal+ in France and USA Network in the U.S. I don't know if you've worked in TV, but you'll get this—networks live or die on compelling content."
Lévy stayed quiet.
Dunn went on, "Canal+ is fine—you've got France's biggest film studio, Gaumont, backing it. But USA Network? Last year, Vivendi paid nearly double its value to buy it. What's the plan?"
Lévy was blunt. "USA Network has to be sold with Universal Pictures."
Dunn's eyes locked onto him. "Mr. Lévy, don't you think that's a bit much? I want Universal Pictures, but you're trying to bundle USA Network, Universal Music, and Mifflin Publishing with it. That's not a fair deal."
"I can be flexible on price."
"But I'd rather have Blizzard."
Lévy gave a wry smile. "Mr. Walker, my job's not easy. I've got a mountain of problems to solve. I'll level with you—I need to clear at least 20 billion euros in debt over the next two years. The U.S. entertainment assets? They've got to go."
Dunn grinned. "Exactly! Isn't Blizzard a U.S. company? Isn't it an entertainment asset?"
Lévy was momentarily speechless.
Dunn leaned in, lowering his voice. "Mr. Lévy, you've clearly done your research on me. You know how I operate. When it's a good partnership, I make sure my partners don't lose out."
"Oh?"
"If this goes smoothly…" Dunn drew out the words, giving him a meaningful look, "I'll take care of most of your debt problems."
Lévy's eyes lit up, a flicker of disbelief crossing his face.
Most of the debt?
He needed to pay off 20 billion euros. If Dunn was covering most of it, that'd be at least 15 billion, right?
But Universal Pictures was worth maybe 6 or 7 billion euros tops.
Lévy was sharp—he caught Dunn's meaning in a flash.
He took a deep breath.
This young guy's ambition, his appetite, was on par with Vivendi's former CEO, Jean Messier, who'd stepped down!
Watching Dunn sit there, calm and composed, enjoying dinner, Lévy's mind was racing.
"Vivendi's got some internet assets too," Lévy said suddenly. "The world's biggest online music site, MP3.com, plus eMusic and a joint venture with Sony for record sales, Intel Music."
Dunn laughed. "Easy. Sony's building the world's biggest music group, right? They're crazy about music. Sell those assets to them. They can't buy Universal Music because of antitrust laws, but those music sites? No restrictions."
Lévy nodded slightly, saying nothing.
After a long pause, he shifted gears, chatting about French culture and scenery instead of business.
Dunn felt a wave of clarity.
This just got a lot simpler!
Lévy wasn't even a Vivendi shareholder—just a board-hired CEO. His top priority was tackling the debt crisis and locking in his position.
With Dunn's help, why wouldn't he jump at the chance?