After looking at such industries as perfume and fashion, Bronfman had decided a couple of years earlier that entertainment was the best investment choice. But he had failed to gain a seat on the board of directors of Time Warner.
MCA executives were kept in the dark. Negotiations started in March when Bronfman flew to Osaka, where Matsushita is based. Key to the deal was Bronfman's ability to gain an exclusive negotiating agreement. He had seen the bidding for Paramount Communications, which didn't even have a record company, soar to $10 billion in 1994 when Viacom's Redstone and Diller became locked in a bidding war. In early April, a deal was reached in which Matsushita was so willing to sell control of MCA, it took a $1.9-billion loss caused largely by the yen's strength against the dollar.
"My take on Edgar is that he bought MCA at a very attractive price, probably the most attractive price of recent studio acquisitions," says Gordon Crawford, senior vice president at Capital Research Co., one of the nation's biggest institutional investors in media and entertainment.
Adds Bronfman: "We paid wholesale."
He signed the deal on Sunday, April 5, with Matsushita keeping the other 20%. Comedian Dennis Miller joked on his weekly cable show that it was the first time Seagram ever left a fifth on the table. Still, Bronfman's timing turned out well. Recently, the studio's "Casper" opened as a hit, as did "Apollo 13." He is quickly assimilating into Hollywood--renting a beach home here, driving a leased Mustang convertible and mingling at movie premieres with the likes of "Apollo 13" star Tom Hanks and its director, Ron Howard.
Nevertheless, Bronfman remains bruised by some of the attacks immediately after the deal. Initial press reports erroneously had him buying 80% of the company for $7 billion, which touched off a wave of criticism that he was overpaying for his ticket into Hollywood.
Lately, however, that has been changing. Seagram's stock has been climbing steadily, and some of the nation's most astute entertainment investors are putting their money into Seagram stock. MCA's music operation, led by its country music division and such rock groups as Live, has been a pleasant surprise for Seagram, turning in results far better than forecast. Still, there is an underlying uncertainty about where it all is going.
"It's absolutely fair to say, 'Look, they bought it well but will they be able to do anything with it, or are they going to do like Matsushita did and screw it up?' " Bronfman says. "But you can't say we overpaid or start out with the presumption that the kid is crazy. The jury is out on the future, but demonstrably the kid is not crazy."
He pauses, then reflects: "I'll tell you what I think the real story is. The real story is this company has transformed itself. It has invested in a growth business versus a non-growth business. It bought very well, and the jury is out. Five years will tell whether we knew what we were doing."