The Unmaking of a Dynasty
Dreaming of a global media company and driven by blind ambition, Edgar Bronfman Jr. shed the crown jewels of his grandfather's empire and nearly destroyed the family fortune.
From the Print Edition:
Edgar Bronfman Jr., Mar/Apr 03
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Even before that, Messier was privately claiming that Charles Bronfman was conspiring to oust him and accused him in public of using the tactics of "bootleggers," a less-than-subtle reference to the origins of the family fortune during Prohibition. Charles refuses to get into a public spat, only expressing relief that the Messier era is over. Edgar Sr., always more direct and blunt than his brother, described Messier as "paranoid," adding pointedly: "Even paranoids have enemies." For his part, Messier is still blaming just about everyone but himself for his downfall, as he settles into a new, much lower-profile life as a New Yorkñbased investment banker and media investor.
Back at Vivendi Universal, the Bronfmans and other shareholders are pinning all their hopes of a recovery today on Messier's replacement: Jean-Rene Fourtou, a 63-year-old former pharmaceutical boss and close Bebear ally whose no-nonsense style, low-key personality and devotion to the bottom line are the complete antithesis of the celebrity CEO/visionary personified by Messier. Whether Fourtou, who has no background in any of Vivendi Universal's main businesses, can get the company out of the intensive care ward remains a question mark. He has to find at least $10 billion just to meet the company's obligations in the next years, which means major asset sales. These have already started, although this is not the kind of market where you want to be a desperate seller. After reviewing the entire gamut of Vivendi Universal's holdings, Fourtou has decided to sell what he can of Messier's acquisitions. That will almost certainly include the former Seagram entertainment businesses, which could be partly or wholly spun off as a separate U.S.-listed company, sold outright, or folded into a restructured empire led by Barry Diller, possibly in league with another key shareholder and ally, former cable magnate John Malone.
Fourtou has hired a top French investment banker whose primary job will be to wring as much value as possible out of every divestiture. He has also handed Edgar Jr. a bigger role, which makes sense, as he's the only person left at the top who knows anything about the U.S. operations. "He's working behind the scenes to regain influence," says one knowledgeable investment banker. But just how much real influence can an American have in a company that's a captive to French politics and the old-guard business club, and who doesn't even speak the language? Not much, insiders agree.
There's no doubt Edgar would love to be a part of any deal for the U.S. assets. But more than one observer sees Diller emerging as the only sure winner from the entire sorry saga, whether or not he ends up in control of all the Hollywood assets. "He's the only one left standing with his pride intact and from a strategic standpoint," says Harold L. Vogel, head of Vogel Capital Management and the author of Entertainment Industry Economics: A Guide for Financial Analysis. "He still has plenty of flexibility and cash in his bank account. Edgar only has paper." Diller said through a spokeswoman that he could not comment on Vivendi Universal's future because "the situation is pretty fluid." While Diller, 62, has been accumulating wealth and enormous clout, the Bronfmans no longer have the financial firepower they first brought to bear on Hollywood. "At $6 billion you're still a player," says Vogel. "At a billion dollars, they're not players anymore."
Edgar Sr. has a right to be angry and bitter over what has befallen a family dynasty that was once so wealthy and influential it drew favorable comparisons to the Rothschilds. He had devoted a working lifetime to carefully nurturing and expanding what his father, a Russian immigrant who grew up in poverty in the harsh landscape of the Canadian Prairies, had started with a single Montreal liquor store in 1916. There's nothing left now to pass on to the fourth generation but diminishing trust funds and memories of what was and what might have been. Yet there's more disappointment than anger in his voice -- and even a hint of relief that the great family burden is no more. His 22 grandchildren will just have to create their own legacies now. "As a matter of fact, I'm glad that there isn't any Seagram to leave to them," he says. "You know, this whole question of entitlement and that they're the Seagram Bronfmans or whatever is not a good thing. People have to go and fend for themselves. I don't know who the hell would run it, and there would be family fights. It's much better not to have that as a legacy."
Edgar Sr. says he's happy to be retired, and is keeping remarkably busy writing books (he's on his fourth, after two memoirs and a tome called The Third Act, on how to make the most of retirement) and breeding and marketing bison meat. He also continues to be a major force in Jewish philanthropic causes and has been an important voice in international Jewish affairs through the years as chairman of the World Jewish Congress. In his spare time, he's producing a movie about a Holocaust survivor, but is smart enough to get Universal on board to distribute and partly finance the film along with some private investors he hasn't identified publicly.
Charles has also kept busy with his philanthropies and has been preoccupied with fixing his disastrous Israeli investments. Ask him if he misses Seagram, and he offers a sad, one-word answer: "Totally." Ask him if he will ever again invest with the family in anything, and the answer is nearly as succinct: "Only with my children."
So if Edgar Jr. wants to continue pursuing his dream, he will almost certainly have to do it alone. But no matter what happens, neither he nor his father will have to worry about giving up their favorite power lunch seats at the famed Grille Room of the Four Seasons restaurant. In one of its smallest asset sales, Vivendi Universal has handed back to the Bronfmans the near 50 percent stake that Seagram had owned in the celebrated dining spot in its landmark Manhattan headquarters.
The Four Seasons will soon be all that remains of the Bronfman influence at the distinctive Park Avenue tower, which was designed by renowned modernist architect Ludwig Mies van der Rohe and will probably always be known to the public as the Seagram Building, regardless of its owner. As part of its efforts to slash costs and raise badly needed cash, Vivendi Universal is moving its shrinking U.S. corporate staff to smaller quarters and putting the famed Seagram art collection -- including works by Picasso, Miró, Rothko and other modern masters -- on the block. This has come as a body blow to Phyllis Lambert, 75, the oldest of the three surviving children of Sam Bronfman. It was Phyllis, an architect by training, who was the key family member involved in selecting the building design and assembling the remarkable collection of paintings, tapestries, photographs and sculptures that the complex would come to house. She has described the coming dispersal of the art, part of which has been on public display since the building opened in 1959 to widespread acclaim, as part "of a whole Greek tragedy."
Meanwhile, after weathering the withering attacks of harsh critics for years, Edgar Jr. may yet emerge from the current mess with the last laugh if Fourtou and his rescue crew manage to resuscitate Vivendi Universal and extract real value from what's left. For now, the best he can hope for is that no one remembers how he traded his family's crown jewels for the fantasy of a global media empire.
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