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Seagram cuts PFE sale price

Bronfman sez he'll take $750 mil

NEW YORK — Polygram Filmed Entertainment’s price is coming down.

Edgar Bronfman Jr. has told associates in recent days he is willing to accept $750 million for PFE, sources say, $250 million below the billion-dollar mark that Seagram was thought to have been hoping to get.

While many people may think that $750 million is still too steep, it dramatically improves the chances of a deal getting done. Most investment bankers on Wall Street believe PFE is worth $500 million to $700 million, and one noted on June 26 that $750 million was much more do-able. Seagram declined comment.

PFE is being sold as a result of Polygram’s sale to Seagram Co., announced a month ago. Bronfman said at the time that PFE would be of more value to an outside company than to Seagram, which already owns Universal Studios.

An internal Polygram analysis had put a value of at least $1 billion on the film company, twice what many in Hollywood and on Wall Street think the company is worth. That analysis was based largely on the library’s annual cash flow of $60 million to $70 million, suggesting the catalog is worth $650 million.

Additionally Polygram has an interest in the Sundance channel and two small TV production businesses, as well as recently released pics set to generate revenue from post-theatrical distribution windows. PFE also has about one dozen pics in the can, in which it has an investment of about $200 million.

Despite the analysis, few people in Hollywood and Europe or on Wall Street agreed that the film division was worth anywhere near $1 billion. Canal Plus, which had expressed interest in keeping PFE in European hands in the leadup to the Polygram sale, said the billion-dollar price was too high.

Seagram’s willingness to accept a lower price is especially good news for PFE chairman Michael Kuhn, who hopes to lead a management buyout but needs to find some backers.

Briefing books about PFE are being prepared by Goldman Sachs and are expected to be sent out to interested parties within a couple of weeks.

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