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No Return to the Family Fold

Edgar Bronfman Jr.'s last-ditch effort to promote his bid fails to sway Vivendi.

September 03, 2003|Richard Verrier | Times Staff Writer

Among the bidders for Vivendi Universal's movie studio, theme parks and TV group, few had as much riding on the outcome as Edgar Bronfman Jr.

The 48-year-old Vivendi vice chairman on Tuesday lost a chance to reclaim the entertainment assets once owned by his family -- and help restore some of the family wealth lost by their disastrous merger with Vivendi.

Bronfman's plans were dashed when the board decided to enter into exclusive negotiations with General Electric, which has proposed merging NBC broadcast and cable channels with Universal's assets.

"The board took his offer very seriously, there was a lot of debate," said one source close to the board.

Bronfman, who initially dismissed the NBC offer as a bad deal for shareholders, sounded conciliatory Tuesday.

"I am hopeful that VU's strategic direction will reward its employees and shareholders for their patient and steadfast support," he said in a statement.

That Bronfman got as far as he did surprised some industry observers.

They noted his unpopularity with shareholders still steaming over his ill-fated partnership with former Vivendi chief Jean-Marie Messier.

Bronfman decided to enter the bidding fray in May, after receiving e-mails of support from executives at Universal.

He recruited Cablevision Systems Corp. as a strategic partner and lined up financial backing from Thomas H. Lee Partners and Blackstone Group.

Bronfman declined to comment for this article. In an interview earlier this year he said: "I know these industries, I helped build these businesses and I have great respect for these management teams, but this is first and foremost a compelling business proposition."

But friends and colleagues said Bronfman also was looking for some personal vindication.

"There's got to be some thought in his head for redemption, that's just human nature," said one Vivendi executive.

Bronfman is the grandson of the legendary Samuel Bronfman, who founded the Canadian Seagram liquor empire and expanded into entertainment. Edgar Bronfman Jr. helped run the family businesses.

Bronfman believed Seagram needed to diversify and take advantage of the burgeoning entertainment industry. In 1995, he sold Seagram's lucrative 24% stake in DuPont to help buy Universal Studios parent MCA. Three years later, he added recording company PolyGram.

That strategy, however, caused a deep rift within the family, with some fearing that the family's wealth would be exposed to the uncertainties of the movie business.

When Bronfman led the sale of the Seagram entertainment assets to Vivendi five years later, the deal seemed like a winner, netting the Bronfman family $34 billion.

The proceeds, however, were in stock, not cash. And when Vivendi's stock went into a tailspin over concerns about the company's strategy and costly acquisitions, the value of the family holdings tumbled.

Bronfman has been largely unrepentant for his role in the Vivendi debacle, blaming the company's woes on Messier's uncontrolled spending.

He makes no apologies for selling to Vivendi.

At the time of the sale, AOL and Time Warner had merged, creating a media behemoth. Bronfman believed Seagram needed to get bigger if it wanted to compete.

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