Still surrounded by speculation about a takeover, Seagram emerged Sunday as a rumored partner in a three-way merger with French conglomerate Vivendi and U.S. cabler Cox Communications.
According to the report in London’s Sunday Telegraph newspaper, the three companies have been in talks on a merger deal that would create a media giant with a potential value of over $100 billion and the Vivendi board was scheduled to meet Sunday to approve the deal. The paper said Seagram would be valued at up to $32 billion, well above its current market valuation of $23 billion.
Seagram representatives would not comment. Reuters reported that a Vivendi spokesman denied the story.
Content, cable, feevee, but no drinks
The reported deal would combine Seagram’s entertainment operations and Cox’s cable networks with Vivendi’s control of France’s Canal Plus and a 24.9% stake in British Sky Broadcasting, while Seagram’s liquor business would be sold.
Seagram, controlled by the Bronfman family, owns 80% of Universal Studios, which consists of the film studio and library, the combined MCA and Polygram recorded music operations, theme parks and 45% of Barry Diller’s USA Networks. Cox’s cable systems are hooked into over 5 million U.S. homes.
Barry Hyman, market strategist for Ehrenkrantz King Nussbaum, said a combination of Vivendi, Seagram and Cox would not be a surprise. “Vivendi has been very aggressive by making a number of acquisitions and they clearly want to be a major player in this sector,” he added. “This deal would give them content and immediate access to the U.S. market.”
Hyman also said the premium for Seagram in the rumored deal would likely meet the Bronfman family’s asking price. “Seagram is certainly willing to sell at the right price, regardless of their denials,” he noted.
Bronfman denies sales talk
Seagram chief Edgar Bronfman Jr. has denied sale speculation repeatedly; earlier this year he said he plans to run Seagram “for a long time.” But investors are betting that the rumors are true and have pushed Seagram stock up 30% this year, partly on the belief that the pending America Online-Time Warner merger will force rival entertainment conglomerates to seek partners.
Bronfman announced earlier this month that Universal Pictures would be profitable in the upcoming fiscal year beginning July 1. U announced last week that it had become the first Hollywood studio to form a marketing partnership with AOL since the online giant announced the Time Warner deal in January.