Friday, November 22, 2024

The Seagram heir who wants to buy Paramount

Must read

The 69-year-old media executive and scion of a one-time beverage giant made a last-minute attempt this week to gain control of Paramount Global, home of the “Top Gun” and “Godfather” franchises. His bid came as Paramount was on the verge of being sold to the progeny of another billionaire: David Ellison, chief executive of movie producer Skydance Media and son of Oracle co-founder Larry Ellison.

In Paramount, Bronfman sees “significant upside” and the chance to remake “one of the world’s most storied media companies,” according to a letter delivered this week to Charles Phillips, chair of Paramount’s special committee of directors. The letter was seen by The Wall Street Journal.

Bronfman prides himself on helping steer companies through big transformations. He also likes to make bold bets. He constantly asks himself a simple question he remembers being posed at a young age, before he went on to produce his first film as a teenager: “Why not?” And when presented with a chance to run Paramount, he found himself asking the question again, people close to him say.

“He is on a great quest,” said Barry Diller, chairman of media conglomerate IAC and a friend of Bronfman’s since his teenage years. “Maybe it’s Don Quixote. Or maybe, given Mr. Money Bags, it might not be a winning position—who knows? But he’s off on the quest.”

Bronfman’s first foray in the entertainment business began as a teenager, when he ran errands on the set of the 1971 film “Melody.” After high school in New York City, he skipped college and began a career as a songwriter, eventually writing lyrics for Celine Dion, Barbra Streisand and Dionne Warwick under pseudonyms.

Decades later, Bronfman reshaped the music industry as an investor and executive, though he’s had a mixed record of success in the broader media business.

Beginning in the mid-1990s, he helped transform his family company—Seagram, the Canadian producer of liquor, juice and soda—into a diversified media conglomerate. The foray proved more complicated than making drinks.

Less than a decade after he assembled that conglomerate, Bronfman decided to sell Seagram to French rival Vivendi in 2000—a deal that led to the destruction of billions of dollars in value for his family.

Paramount is certainly facing plenty of disruption. With millions of American households cutting the cord every year, the company’s TV business—which includes CBS and cable networks Comedy Central and Nickelodeon—is eroding fast.

Bronfman is looking at ways Paramount can cut costs through partnerships. In recent weeks, he has had discussions with streaming-hardware maker Roku—in which his venture-capital firm, Waverley Capital, was an early investor—about providing back-end technology for Paramount’s streaming service, according to people familiar with the situation.

“The media landscape is undergoing tremendous change, as it has in the past and will again,” Bronfman said in the letter to Phillips. “However, the value of content has increased over time.”

Waverley was an early investor in Pluto TV, the free, ad-supported streaming service later bought by Viacom, now Paramount. Other investments include the Athletic, which was bought by the New York Times, and FuboTV, a sports-oriented streaming service where Bronfman serves as executive chairman.

“He and I always talk about his work at Universal and Warner Music and what transpired back then and how he was able to get through those situations,” David Gandler, CEO of FuboTV, said of Bronfman.

Bronfman faces long odds when it comes to winning Paramount. Skydance has the right to counter any bids, and has deep pockets, given that the CEO’s billionaire father is helping to back the effort. On Thursday, Skydance called for Paramount to end talks with Bronfman on the grounds that they violated terms governing its own negotiations with the company.

Ellison and Bronfman are similar in plenty of ways. “Both are wealthy scions with a creative bent that pushed their family businesses into entertainment,” said Chris Marangi, co-chief investment officer at Gabelli Funds, Paramount’s second-biggest voting shareholder.

“The advantage that Bronfman has is that he is well known and deeply loved by Wall Street investors,” Marangi said.

Bronfman’s focus on film dates to the late 1970s. He co-produced the 1982 flop “The Border,” starring Jack Nicholson. Later that year, he accepted a summons from his father, Edgar Bronfman Sr., to join Seagram in Europe.

As Edgar Sr. prepared to pick Seagram’s next leader, many thought it would be the family’s eldest son, Sam. But he ended up tapping Edgar Jr. for the role.

He took over as CEO of the family company in 1994 and set in motion plans to pivot the liquor business to media, which he believed offered better growth opportunities.

Over the next few years, Bronfman worked to build a media empire. In 1995, he acquired MCA, the movie, music and theme-park giant that he renamed Universal Studios and Universal Music Group. Two years later, Seagram sold its USA and Sci-Fi cable channels as well as almost all of its Universal Studios production company to Home Shopping Network for $4.1 billion. In 1998 he made the biggest deal in the history of the music business: a $10.6 billion acquisition of PolyGram, home to acts like Hanson and LL Cool J.

The PolyGram deal, funded in part by the sale of Seagram’s Tropicana juice business to PepsiCo, turned the Canadian liquor maker into the world’s largest music company. That earned him some clout, but the industry was on the brink of massive digital disruption brought about by the Internet era.

Bronfman soon enough concluded that Seagram still didn’t have the critical mass to compete with other media giants, and in 2000 orchestrated its sale to French conglomerate Vivendi for $34 billion in an all-stock transaction. Vivendi sold the core beverage business to Pernod-Ricard and Diageo, who divided up the assets, marking the end of the 143-year-old Seagram spirits empire.

Vivendi Chairman Jean-Marie Messier went on a spending spree. Within 18 months of the Seagram deal, Vivendi was loaded with debt and nearing bankruptcy. Bronfman successfully agitated the board to oust Messier, and Vivendi in 2003 put its U.S. entertainment assets on the block.

Bronfman, then nonexecutive vice chairman of Vivendi, assembled a group of investors to make an offer; the bid was unsuccessful. Later that year he resigned from the Vivendi board to focus on another takeover target: Warner Music, which he and a group of private-equity firms acquired for $2.6 billion.

“When everyone was running away from music, he was super-bullish and prescient on the future of the industry,” said Craig Kallman, chairman and CEO of Atlantic Records, who first met Bronfman in 2004 as he was taking the reins at Warner Music.

Bronfman would go on to take Warner Music public in 2005 before selling the business to billionaire Len Blavatnik’s Access Industries for $3.3 billion in 2011.

When he flew to Boston in May and met with Shari Redstone, Paramount’s controlling shareholder, she was impressed with how much he understood the business, according to a person close to the situation.

“Edgar gets artists,” said Brian Grazer, co-founder of Imagine Entertainment, who recalls first meeting Bronfman around the 1995 premiere of the film “Apollo 13,” produced by Grazer and distributed by Universal Pictures. “He knows these people are harder on themselves than anyone else because he’s an artist in his own way.”

Write to Lauren Thomas at lauren.thomas@wsj.com, Anne Steele at anne.steele@wsj.com and Jessica Toonkel at jessica.toonkel@wsj.com

Latest article