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Bronfman Bid for Universal Wins Backers

Executive has sufficient financing to make an offer for entertainment assets, sources say.

June 12, 2003|Richard Verrier | Times Staff Writer

Defying naysayers on Wall Street, Edgar Bronfman Jr. has lined up financial backing to make a bid for the Universal entertainment assets his family once owned, sources familiar with the proposal said Wednesday.

Bronfman has secured key commitments from two prominent private equity firms -- Thomas H. Lee Partners and Blackstone Group -- to help finance a bid for Universal's Hollywood movie studio, theme parks, television channels and music company, the sources said. They said Edgar Bronfman Sr. also would contribute an undisclosed amount toward his son's financing package.

A spokesman for the younger Bronfman declined to comment Wednesday.

Armed with those commitments, Bronfman is ready to make an offer as early as this month, sources said. Bronfman, Vivendi Universal's vice chairman, ran the entertainment company until his family's Seagram Co. sold its entertainment and liquor empire to French-owned Vivendi in 2000 for $34 billion.

The Universal assets are valued at about $16 billion, after subtracting debt. It is unclear how much Bronfman will offer.

In his quest to return to Hollywood, Bronfman last month lined up an approximately $9-billion commitment from a group that includes Merrill Lynch & Co. and is headed by Wachovia Corp. He also approached Cablevision Systems Corp. to serve as a strategic partner and contribute its Rainbow cable group, which includes American Movie Classics, WE: Women's Entertainment and Independent Film Channel. Those assets are worth about $4.6 billion; under the Bronfman plan, they would merge with Universal's lucrative USA and Sci-Fi cable channels to create a privately held media company in which Vivendi would still hold a stake.

As for Blackstone, it owns half of Universal's theme parks in Orlando, Fla., and has been in talks to acquire all the parks. And Thomas H. Lee recently bought book publisher Houghton Mifflin from Vivendi.

Bronfman's emergence as a serious contender for the Universal assets seemed unlikely to many on Wall Street a few weeks ago when he first expressed interest in joining the bidding fray. Many skeptical investors noted that it was Bronfman who persuaded his family to join forces with Jean-Marie Messier, then Vivendi's chief executive, creating the conglomerate that yielded disastrous results, especially for the Bronfman family, Vivendi's largest shareholder.

But Bronfman has been credited with playing a key role in Messier's boardroom ouster last summer and has been a trusted advisor to current Vivendi CEO Jean-Rene Fourtou, who was brought in to rescue Vivendi from financial crisis and is now eager to sell the French company's American entertainment assets to reduce Vivendi's debt.

A Bronfman bid would intensify the competition for the Universal assets, which has attracted interest from media firms and investors, including Liberty Media Corp., Viacom Inc., Metro-Goldwyn-Mayer Inc., General Electric Co.'s NBC and an investment group headed by oil tycoon Marvin Davis.

The only offer on the table is the Davis group's $13-billion proposal to buy a controlling interest in Universal. That bid's architect is former Seagram executive Brian Mulligan. The Davis camp has secured financial backing from Texas Pacific Group, Bain Capital and Carlyle Group.

Last month, Vivendi said that to avoid a possible conflict of interest, Bronfman and his father, who also is a Vivendi director, had agreed to stop attending board and committee meetings.

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