Industry executives around the world were this week weighing up the impact of the unfolding crisis at Vivendi Universal.

The ousting of Canal Plus boss Pierre Lescure and the management turmoil at parent company Vivendi Universal has thrown into doubt the ability of Europe's most diverse pay-TV group and the continent's largest film financier to operate normally.

The sacking of Lescure and the resignation of Denis Olivennes last Friday both appear to have been sparked by questions of strategic direction at Vivendi Universal and the ever-stricter tightening of finances at the French Canal Plus channel.

Even before the dramas of this week, Canal Plus' financial restraints appeared to be having an effect on the French and international film business. Asian sellers report that Canal Plus had ceased buying films from their region.

The tighter controls have been widely seen as resulting in Canal Plus making fewer pre-buys of French and European films. That was said to be one of the factors aggravating the market conditions that last week forced No Man's Land producer Noe Productions into receivership.

Noe producer Frederique Dumas blamed her company's demise on "the lack of a financial comfort zone for independent producers' the current disorder within [pay channel] Canal Plus and the lack of visibility about its future' and reduced investment on the part of the free-TV broadcasters."

Coming just a week after the collapse of the massively indebted Kirch, Vivendi Universal's troubles could not have come at a worse time for distributors and producers.

At this week's MIP-TV market, meanwhile, Kirch and Vivendi Universal were the top subjects of conversations. With the Kirch insolvency so recent, the measurable effect on MIP-TV was small. Sellers talked of new market realities, notably lower prices and smaller volumes of sales. But most saw the impact as having a longer-term effect: weakening company finances, reducing the number of sales outlets and making financiers even warier of the entertainment sector.

"Getting $1.5m-$2m upfront per picture is no longer happening," said Melissa Wohl, vice president of sales at Harmony Gold. "Now it takes a top-name cast to get anyone from Germany to so much as screen a tape."

"It has an effect on everyone as it affects the finances of the people we are dealing with. We've had to downgrade our price expectations. Where we may have taken equity in a show, we will now be lucky to get a minimum guarantee," said one film- and TV-seller who preferred to remain anonymous for fear of upsetting his shareholders. "Many of our [film] buyers tell us that they no longer factor a TV sale into the price they offer us. They need to make their money from theatrical and DVD alone."

"The losses sustained by the bankers will make it harder for all entertainment businesses to raise money," said Timo Lahtinen, chief executive of Denmark's Smile Entertainment.

But others were less pessimistic. Kirk d'Amico, chairman and CEO of Myriad Pictures, said: "We are in a consolidation phase. The market will move to fill the void. The German economy is stronger than many people think. Take the theatrical box office as an indicator."

David Hulbert, president of Walt Disney Television International, said: "The medium-term outcome will be OK. In two years, free-TV will be healthy and there will still be a pay-TV business, even if it is not profitable by that date. Nearer-term there will be a lot of disarray. There are too many channels without a raison d'etre."

Many of the problems were in the German system before KirchMedia imploded last week. The Neuer Markt collapse had already made investors very wary, while consolidation of the free-TV sector into 'families' of channels had already begun. How much room that left for the licensing sector, which profited from channel profusion, was also moot. Andreas Klein, head of Splendid Television, said: "While we will always have a need for the licence traders, it is not a growing business. The demand for feature films was already dropping with the growth of game and reality shows."

Others pointed out that RTL has once again reverted to being an all rights buyer. Many suggest that Kirch's problems had little to do with free-TV owned by the bankrupt KirchMedia and everything to do with its still-operational Premiere pay-TV operation. Losing money from showing first-run films, Kirch sought to bolster Premiere through the acquisition of soccer and then motor racing rights.

Kirch's more conventional businesses are in better shape and were active at MIP. Fred Kogel, KirchMedia deputy chairman, said its production arm Beta has "one of the best line-ups we ever had". It included the $35.5m epic Napoleon, with Gerard Depardieu, Christian Clavier and John Malkovich, The Apocalypse, the last instalment of The Bible series, and law firm series Edel & Starck ' Partners In Law.

Dr Miriam Meckel, permanent secretary of the North Rhine-Westphalia regional government, described the Kirch debacle as "a corporate mistake, based not on reduced advertising revenues but on wrong assumptions and decisions which would have had just as negative long-term consequences in a fundamentally stable advertising climate."