A Fallen Mogul Stirs

By Lisa Takeuchi Cullen

If only Edgar Bronfman Jr. could borrow the powers of God, like Jim Carrey in Universal Pictures' Bruce Almighty. Then the former CEO of Seagram, the distiller that once owned Universal, could turn back time and erase the disastrous sale of the firm his family founded to France's Vivendi. Since that deal in December 2000, Vivendi Universal's stock has dropped 71%, devastating the Bronfman family fortune. And Edgar Jr., despite some successes at Seagram, has reinforced his image as dilettante and wannabe mogul. Business Week crowned him one of the worst managers of 2002, and New York magazine called him "possibly the stupidest person in the media business"--pretty cold when you consider the competition.

As a mere mortal, albeit still a rich and well-connected one, Bronfman, 48, has to confront his past in the old-fashioned way. Shortly after Vivendi announced plans to shed $7 billion in debt this year by unloading entertainment assets, including its film studios, music group, TV networks and theme parks, Bronfman last week declared his desire to buy them back.

It won't be easy. Bronfman must compete against a gaggle of better-financed suitors. Even if he does manage to assemble credible backers and buy back the businesses, many in Hollywood and on Wall Street doubt he has what it takes to run them. Still, the ploy may be his best shot at redeeming his, and his family's, tarnished fortune and reputation. If nothing else, it might boost the value of their holdings in Vivendi.

But make no mistake, say his friends: Edgar Jr. would love to climb back into the mogul role. He has always loved Hollywood. The grandson of Seagram founder and former bootlegger Samuel Bronfman, Edgar Jr. began his career writing songs performed by Dionne Warwick and Ashford and Simpson and producing small movies. Pulled into the family business in 1982 by his father and made CEO in 1994, he scored wins by pushing premium brands like Chivas Regal and Absolut, and buying and selling Tropicana for a juicy profit. But Hollywood continued to beckon. He dumped the company's safe, lucrative stake in chemical giant DuPont to buy Universal Studios' parent MCA in 1995 and recording company PolyGram in 1998.

When Bronfman sold Seagram to Vivendi for shares of the French utility and telecommunications company's stock, he wasn't the only media exec seduced by an ill-considered merger; the wedding of Time Warner (parent of TIME) to AOL comes to mind. But that's not much comfort to the Bronfman clan, which has seen its stake shrivel (in part because of stock sales) from $6.5 billion to a little more than $1 billion. So where will Edgar Jr. get the money for his bid? Analysts say Universal Music Group could sell for about $7 billion, and the rest of the entertainment units--Universal Pictures, TV networks including USA and Sci Fi, Vivendi Universal Games and the Universal Studios theme parks--for at least $13.5 billion. Bronfman's spokesman says financing is falling into place. The Edgar Bronfman Sr. side of the family will contribute some cash; Wachovia Securities and Merrill Lynch have agreed to help finance the debt; and Cablevision would add its cable assets to any deal in exchange for an equity stake. Bronfman is said to be confident of snagging private-equity backers by the time Vivendi is expected to ask for bids, around mid-to late June. But a knowledgeable source says a partnership with the Blackstone Group, one rumored candidate, is unlikely.

The big names sniffing around Vivendi's entertainment assets include Liberty Media's John Malone, General Electric's NBC, Viacom, MGM, and oil tycoon and former Fox owner Marvin Davis. USA Interactive head Barry Diller's blocking rights and ownership stake add to the intrigue. Vivendi last fall rejected as too low Davis' reported offer of $15 billion plus $5 billion in debt assumption, but Davis hasn't given up. Malone's dealmaking prowess and close ties with Diller give him an edge.

Bronfman thinks he has an ace in his close relationship with Vivendi CEO Jean-Rene Fourtou. But whether in Edgar Jr. they can trust elicits a Gallic shrug from shareholders. If he offers the right price for the Universal units, says Colette Neuville of a stock owners' group, "whether Bronfman can run it well is another matter that doesn't concern us." --With reporting by Peter Gumbel/Paris and Jeffrey Ressner and Sonja Steptoe/Los Angeles

With reporting by Peter Gumbel/Paris and Jeffrey Ressner and Sonja Steptoe/Los Angeles