×

Seagram bubbly

Film, music in tune; merger to close in Nov.

NEW YORK — “Erin Brockovich” and “Gladiator” led a film turnaround while rapper Eminem hit high notes for the music division to buoy the financial results of Universal parent Seagram, as CEO Edgar Bronfman Jr. anticipated that the company’s merger with Vivendi will close in November.

By late August the partners will have completed all required regulatory filings in the U.S., Europe and Canada. Stateside, a statutory waiting period has expired without any requests for additional information, Bronfman told a group of analysts during a conference call Thursday, reflecting tacit approval from antitrust authorities.

Seagram, Vivendi and Canal Plus are developing a strong integration plan, he added, with 22 teams in place to examine the partners’ various businesses to boost revenue and cut costs. Bronfman and Seagram chief financial officer Brian Mulligan promised to give the financial community a full rundown on the merger, with plenty of numbers, at an investors’ meeting scheduled for October.

Bronfman also noted that Universal Pictures is stepping up the pace on certain projects amid the threat of a strike by actors and writers next summer. That means the studio may see higher-than-expected cash outlays this fiscal year.

Seagram posted $40 million in net income for the fiscal year ended June 30, down from $686 million the year before. The earlier figure, however, was distorted by a one-time gain of nearly $1.1 billion from the sale of Seagram’s Tropicana unit. On a pro forma basis, to account for sales and changes in assets, Seagram lost $208 million in 1999 compared with its $40 million profit in fiscal 2000.

Revenue rose 27% to $15.7 billion for the year.

Beating Street forecast

In the fourth quarter, a net loss of $128 million was wider than a $53 million loss the year before but still beat Wall Street’s expectations. Revenue for the three months rose 11% to $3.9 billion.

The film division has turned profitable. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $5 million for the quarter compared with a loss of $69 million the year before, despite an unspecified writedown for flop “The Adventures of Rocky & Bullwinkle.” For the full year, losses narrowed to $61 million from $136 million. “Erin Brockovich,” jointly owned by Columbia Pictures; “Gladiator,” half-owned by DreamWorks; and “U-571” fueled the turnaround.

Eddie Murphy’s “Nutty Professor II: The Klumps” opened strong in July, and Bronfman praised the fall/winter lineup, which includes “Meet the Parents,” “The Watcher,” “Dr. Seuss’ How the Grinch Stole Christmas” and “Family Man.”

New specialty film division Universal Focus will roll out Working Title’s “Billy Elliot” in October.

Bronfman called the motion picture biz highly variable — certainly Universal has taken some lumps. But he credited management — namely, Universal Studios president and chief operating officer Ron Meyer and Universal Pictures chairman Stacey Snider — for an understanding of the market and an eye on costs that fueled the recent upswing.

Striking fear

On the strike issue, Bronfman said, “I think everyone in Hollywood is conscious that we could be coming up to a strike” that the studios are eager to avoid, but not at any price. He said U may be fast-tracking some projects but won’t be rushed into “spending huge amounts of money” on talent or scripts that aren’t appropriate. The studio now has seven films in various stages of production, he said, including “The Mummy 2” and “Jurassic Park 3.”

U is also planning to take a non-cash charge in the current fiscal year to implement new film accounting rules, but execs weren’t ready to give a number yet. They promised it will be well below the steepest charges seen elsewhere. Sony, for instance, took a writedown of nearly $1 billion.

Seagram also reported blow-away results for Universal Music Group, with more than $1 billion in EBITDA for the year. In the quarter, cash flow jumped 56% to $217 million and revenue rose 7% to $1.42 billion. Key artists for the world’s biggest music group include Eminem, Bon Jovi, Sisqo, No Doubt, Sting, Hanson and Dr. Dre. New releases include albums from 98 Degrees, Boyz II Men and Andrea Bocelli.

He said growth will continue, perhaps less dramatically, and that Universal’s position in Japan, the world’s second largest music market, is improving.

Early this month, Universal announced a trial for Bluematter, a new digital music product enabling commercial downloads of music from the Internet. Bronfman said the technological challenges of a system that allows consumers to legally purchase and download music online are immense, but that the company and the industry are moving forward. He expects to see “millions, if not tens of millions” of tracks sold legally by the end of the year.

Bronfman said Universal expects to break even on its international cable business, including nets 13th Street and Studio Universal, in about 18 months — far sooner than expected.

Other divisions

Recreation cash flow jumped 41% for the year to $188 million, and revenue firmed 5.6% to $862 million. Stronger numbers were partly due to higher management fees from Islands of Adventure at Universal Orlando, lower overhead and vidgame sales. Universal Studios Japan in Osaka is slated to open next spring.

Wine and spirits, which houses brands like Absolut Vodka, Chivas Regal and Crown Royal, is up for sale as part of Seagram’s merger with Vivendi. Bronfman said the company is talking with advisers on how best to dispose of its historic business. Possible suitors include other Bronfmans who’d like to keep the Seagram’s trademark in the family.

Revenue and cash flow at that biz both rose about 6% for the year to $5.1 billion and $684 million, respectively.

More Biz

  • Lionsgate CEO Jon Feltheimer

    Starz Nears Realignment: Why Lionsgate Won't Hire a CEO to Replace Chris Albrecht

    Nearly six months after Starz CEO Chris Albrecht exited in February, Lionsgate brass is moving closer to a revamp of the premium TV network’s executive structure. According to insiders, at least one thing is clear: Albrecht is not expected to be replaced as CEO. Instead, Lionsgate chief executive Jon Feltheimer is taking a more active [...]

  • Movie Ticket Subscriptions

    As MoviePass Fades, Theaters Fall In Love With Subscription Services

    MoviePass may be cratering, but movie theater subscriptions are here to stay. AMC and Cinemark already operate their own online ticketing services. And by the end of July, Regal Entertainment is expected to unveil a subscription plan for customers accustomed to getting all manner of entertainment for a monthly fee. With ticket sales down more [...]

  • John FordNPact Awards, Show, Los Angeles,

    John Ford to Exit as Head of Unscripted Producers Trade Association NPact

    John Ford has stepped down as general manager of NPact, the trade association that represents unscripted TV producers. Ford is exiting the post he’s held since 2015 because of the potential for conflicts of interest arising from his role as head of programming for digital multicast outlets Justice Network and Quest Network. The channels were [...]

  • Woodstock 50 Applies for Vernon Downs

    Woodstock 50 Applies for Vernon Downs Permit Yet Again

    For better or worse, Woodstock 50 isn’t giving up on Vernon Downs, despite being rejected twice already: The producers have applied for another permit to hold the festival at Vernon Downs, according to the Utica Observer Dispatch. Town Attorney Vincent Rossi confirmed the application was submitted Wednesday. This is the festival’s third application; previous applications [...]

  • Bert and Ernie

    Sally Field, Linda Ronstadt and 'Sesame Street' Among 2019 Kennedy Center Honorees

    Sally Field, Linda Ronstadt, “Sesame Street,” conductor Michael Tilson Thomas and R&B veterans Earth, Wind and Fire have been selected as the 2019 Kennedy Center Honorees. The kudos will be handed out Dec. 8 at the Kennedy Center Opera House in Washington, D.C. The award to “Sesame Street” marks the first time the prestigious laurel [...]

  • Jeffrey Epstein

    Jeffrey Epstein Denied Bail in Sex Trafficking Case

    Jeffrey Epstein, the high-living financier who partied and traveled with Hollywood stars and world leaders, has been denied bail. The multimillionaire businessman is accused of sexually abusing underage girls as young as 14 years old and collecting child pornography. Prosecutors argued successfully that Epstein’s wealth made him a serious flight risk. He faces up to [...]

  • AWAL Names Bianca Bhagat as Senior

    AWAL Names Bianca Bhagat as Senior VP, Synch & Brand Partnerships

    AWAL, Kobalt’s recorded music company, announced the hiring of Bianca Bhagat as senior vice president, synch & brand partnerships. Based in Los Angeles, she will oversee AWAL’s global synch & brand partnerships team, pursuing creative marketing opportunities for the AWAL roster, according to the announcement. Most recently with Glassnote, leading the Film and TV department [...]

More From Our Brands

Access exclusive content