grinner
05-25-2003, 12:18 PM
Bronfman heir assembles bid for music and movie business; analysts skeptical
ALLAN SWIFT
Canadian Press
Sunday, May 25, 2003
CREDIT: (AP/Jacques Brinon)
Edgar Bronfman Jr., president and chief executive officer of Seagram, arrives at the Vivendi Universal headquarters to attend the company's board of director's meeting in Paris Wednesday. (AP/Jacques Brinon)
MONTREAL (CP) - Analysts are concerned that Edgar Bronfman Jr., former captain of the Canadian-based Seagram liquor empire, is embarking on another financial adventure that could turn out to be a titanic disaster.
Last week, Bronfman and his father Edgar Bronfman Sr. resigned from the board of Paris-based communications giant Vivendi Universal to announce they want to buy back Vivendi's Universal entertainment business, which includes some of the world's biggest movie and music companies.
Bronfman bought most of those entertainment assets in a controversial move when he was chief executive of Seagram, before he sold Seagram to Vivendi in December 2000 in exchange for $34 billion worth of Vivendi stock.
After a series of bad moves by former Vivendi CEO Jean-Marie Messier, the Seagram stake in Vivendi - a quarter of it belonging to the Bronfman family - fell to a fraction of its value, described as the largest- ever loss of a family fortune.
Some observers believe Bronfman wants to redeem himself in the eyes of his family from his earlier costly decisions.
"I wouldn't be surprised if he wanted to assuage any criticism or skepticism that may have fallen on his shoulders from the last time around," media analyst Peter Kreisky said in an interview, adding: "I would hope that he's learned from some of his mistakes."
The analyst also says Bronfman may be restless as just a board member at Vivendi.
"He probably would like to plunge back into the day-to-day management of a big entertainment company," Kreisky said.
A Bronfman spokesman admitted as such, saying that if Bronfman manages to bring together the buyout investing partners, "he would be logically comfortable with being the head of the company that would take them forward."
The Vivendi entertainment assets include Universal Studios, makers of movies like Bruce Almighty, just opening with actor Jim Carrey, theme parks, the world's largest music record company and the USA and Sci-Fi cable networks
Kreisky says the movie business is doing well, as it has learned to leverage blockbuster hits with merchandising.
The entire music industry, however, has suffered from the erosion of digital music downloading.
Media analyst Martha Wohrle of Mercer management is dismissive of the Bronfman attempt and she also has little regard for the music business.
Wohrle said Cablevision Systems Corp., committed to backing Bronfman, is much too small to be a significant player, with some three million customers, compared with industry leader AT&T Comcast with more than 20 million.
"Cablevision's a joke. It's too tiny in terms of the number of homes they have to give any leverage at all to Vivendi's assets," Wohrle said.
She said the investors reportedly backing Bronfman, like Blackstone Group and Kohlberg Kravis Roberts, always emerge around such projects.
"It just seems there's a lot of people manoeuvring around, putting their names down as sort of placeholders until a more credible consortium starts to emerge," she said.
"My personal view is I don't take this bunch of people seriously. Do we really want to see him (Bronfman) fail for a fourth time?"
But Bronfman's spokesman, who asked not to be named, said the executive has a serious plan to keep the entertainment companies together and expand them.
"He recruited management into those businesses, he built those businesses and he believes that their best days are in front of them. So as an investor he believes he can increase their value."
The spokesman said Bronfman has found his strategic partner, with Cablevision, has made progress in securing loans with Merrill Lynch and Wachovia Securities and is lining up private equity in back-to-back meetings at his New York office.
"I can tell you that those meetings are going very well, there is meaningful and significant interest by meaningful players and that he's feeling more confident every day that this is going to happen.
"His vision is to keep these business together and to grow and develop them."
Wohrle said Bronfman has to be careful not to let his passion for entertainment blinker his eyes to the pitfalls.
"I think he's always found it very seductive. I think it's his first love," she said.
This does not mean it's a bad investment, she said, but "when you buy a business because it's your passion then you better surround yourself with some very good operational people who perhaps aren't guided by their hearts."
After the sellout to Vivendi (TSX:VUE), the Bronfman family was the largest single shareholder, with 7.5 per cent. As of March 31 the stake was 4.23 per cent.
Edgar Sr.'s Montreal-based brother Charles, also a Vivendi board member, will not take part in any Vivendi Universal entertainment bid, said a spokesman.
ALLAN SWIFT
Canadian Press
Sunday, May 25, 2003
CREDIT: (AP/Jacques Brinon)
Edgar Bronfman Jr., president and chief executive officer of Seagram, arrives at the Vivendi Universal headquarters to attend the company's board of director's meeting in Paris Wednesday. (AP/Jacques Brinon)
MONTREAL (CP) - Analysts are concerned that Edgar Bronfman Jr., former captain of the Canadian-based Seagram liquor empire, is embarking on another financial adventure that could turn out to be a titanic disaster.
Last week, Bronfman and his father Edgar Bronfman Sr. resigned from the board of Paris-based communications giant Vivendi Universal to announce they want to buy back Vivendi's Universal entertainment business, which includes some of the world's biggest movie and music companies.
Bronfman bought most of those entertainment assets in a controversial move when he was chief executive of Seagram, before he sold Seagram to Vivendi in December 2000 in exchange for $34 billion worth of Vivendi stock.
After a series of bad moves by former Vivendi CEO Jean-Marie Messier, the Seagram stake in Vivendi - a quarter of it belonging to the Bronfman family - fell to a fraction of its value, described as the largest- ever loss of a family fortune.
Some observers believe Bronfman wants to redeem himself in the eyes of his family from his earlier costly decisions.
"I wouldn't be surprised if he wanted to assuage any criticism or skepticism that may have fallen on his shoulders from the last time around," media analyst Peter Kreisky said in an interview, adding: "I would hope that he's learned from some of his mistakes."
The analyst also says Bronfman may be restless as just a board member at Vivendi.
"He probably would like to plunge back into the day-to-day management of a big entertainment company," Kreisky said.
A Bronfman spokesman admitted as such, saying that if Bronfman manages to bring together the buyout investing partners, "he would be logically comfortable with being the head of the company that would take them forward."
The Vivendi entertainment assets include Universal Studios, makers of movies like Bruce Almighty, just opening with actor Jim Carrey, theme parks, the world's largest music record company and the USA and Sci-Fi cable networks
Kreisky says the movie business is doing well, as it has learned to leverage blockbuster hits with merchandising.
The entire music industry, however, has suffered from the erosion of digital music downloading.
Media analyst Martha Wohrle of Mercer management is dismissive of the Bronfman attempt and she also has little regard for the music business.
Wohrle said Cablevision Systems Corp., committed to backing Bronfman, is much too small to be a significant player, with some three million customers, compared with industry leader AT&T Comcast with more than 20 million.
"Cablevision's a joke. It's too tiny in terms of the number of homes they have to give any leverage at all to Vivendi's assets," Wohrle said.
She said the investors reportedly backing Bronfman, like Blackstone Group and Kohlberg Kravis Roberts, always emerge around such projects.
"It just seems there's a lot of people manoeuvring around, putting their names down as sort of placeholders until a more credible consortium starts to emerge," she said.
"My personal view is I don't take this bunch of people seriously. Do we really want to see him (Bronfman) fail for a fourth time?"
But Bronfman's spokesman, who asked not to be named, said the executive has a serious plan to keep the entertainment companies together and expand them.
"He recruited management into those businesses, he built those businesses and he believes that their best days are in front of them. So as an investor he believes he can increase their value."
The spokesman said Bronfman has found his strategic partner, with Cablevision, has made progress in securing loans with Merrill Lynch and Wachovia Securities and is lining up private equity in back-to-back meetings at his New York office.
"I can tell you that those meetings are going very well, there is meaningful and significant interest by meaningful players and that he's feeling more confident every day that this is going to happen.
"His vision is to keep these business together and to grow and develop them."
Wohrle said Bronfman has to be careful not to let his passion for entertainment blinker his eyes to the pitfalls.
"I think he's always found it very seductive. I think it's his first love," she said.
This does not mean it's a bad investment, she said, but "when you buy a business because it's your passion then you better surround yourself with some very good operational people who perhaps aren't guided by their hearts."
After the sellout to Vivendi (TSX:VUE), the Bronfman family was the largest single shareholder, with 7.5 per cent. As of March 31 the stake was 4.23 per cent.
Edgar Sr.'s Montreal-based brother Charles, also a Vivendi board member, will not take part in any Vivendi Universal entertainment bid, said a spokesman.