Seagram's heir shoots for stars - Business - News - The Independent

Seagram's heir shoots for stars

EDGAR BRONFMAN has stars in his eyes - Hollywood stars. The drinks mogul, chief executive of Seagram, the Canadian distiller, and heir to his family's multi-billion dollar fortune, has always fancied the entertainment business. He even married a starlet. But his box office record as a young producer was less than cosmic. "The only thing Edgar Bronfman proved in Hollywood is that he can't make films," said one industry analyst.

So Mr Bronfman's decision last week to sell Seagram's cash-generating 25 per cent stake in Du Pont, the chemicals company, for $8.8bn (£5.5bn), and use the proceeds to buy 80 per cent of media giant MCA is raising eyebrows in the US investment community. The steady flow of dividends from Du Pont financed the liquor group's move upmarket, paying for acquisitions such as Martell, a French cognac maker, and Tropicana Products, a US fruit juice company. Chemicals may not be exciting, but they are predictable.

The movie and music business is the exact oposite. Seagram is boarding MCA just as its senior officers are abandoning ship. The company's Universal Studio made a mark for itself with hits such as Jaws and Jurassic Park. But the director responsible for those blockbusters, Stephen Spielberg, has now defected to help form rival DreamWorks with David Geffen, the music potentate, and Walt Disney animator Jeffrey Katzenberg.

Universal's veteran producers, Lew Wasserman and Sidney Sheinberg, are also expected to depart shortly. Mr Bronfman may well replace them with his friend Michael Ovitz, the head of Creative Artists Agency, the powerful representative of actors, writers and directors, who is eager to run a big studio.

Notwithstanding some critical film successes and a stable of hot country music performers, MCA has been a disappointment for its current owner, Matsushita. The company is letting MCA go for just $7bn, a loss of $3bn in 1995 dollars. The question now is whether Mr Bronfman can do any better.

Critics who see him as a dilettante view his latest foray into entertainment as an expensive indulgence. After an lite Hollywood bash recently one insider commented that Mr Bronfman "loves being in that crowd - it was a great aphrodisiac for him". Doing business with Tinsel Town's sharks is a different matter, though. His last big Hollywood deal, buying a 15 per cent share of Time Warner for $2bn, produced nothing but red ink. The media company lost $104m last year.

But the 39-year-old mogul shrugs off such complaints. "I am rich by most people's standards," he told Canadian Business Magazine. "But I don't think having money prevents you from having ability, as my father and many others have demonstrated." Despite the losses at Time Warner he insists his top priority is to generate shareholder value; an obvious one considering Seagram is 36.4 per cent owned by him and his relatives.

Mr Bronfman's performance will be measured against those of his father and grandfather. Samuel Bronfman, the son of a Jewish immigrant, founded the business in the 1920s, shipping whisky from Canada to US bootleggers during Prohibition.

Edgar Bronfman Sr expanded the company into oil and gas and then chemicals. He also toyed with Hollywood, buying a 15 per cent stake in Metro-Goldwyn- Mayer in the 1960s and merging it with Time. But he sold out to Kirk Kerkorian, the corporate raider, in 1968.

His son is something of a rebel. Before he left high school he had made his first film, The Blockhouse, a stark Second World War drama. But he incurred his father's wrath for skipping university to go straight to Hollywood.

Even so, Mr Bronfman was eagerly welcomed back to Seagram after his 1980 film with Jack Nicholson, The Border, flopped. He rose quickly, and had soon surplanted his older brother, Samuel, as heir apparent. His training began in earnest when he was sent to Europe in 1982 to help Ed McDonnell restructure the company's chaotic business there. Two years later he took over the US operation, cutting the workforce by 55 per cent.

Since 1989 he has been president, and last June he became chief executive, although his father and uncle, Seagram's joint chairmen, keep a close eye on him. After last week's purchase, the parental gaze will be even more focused on Edgar Junior.

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