Edgar Bronfman Jr. is leading an effort to acquire Vivendi Universal’s entertainment assets in partnership with Cablevision.
The surprise offer, which includes Universal Music, came together over the past 10 days. It will be the highest profile move yet to gain control of the entertainment assets, which have been the subject of ceaseless speculation ever since Viv U ran into financial trouble last year.
In an interview with Daily Variety Tuesday night, Bronfman said he waited to make his move until Vivendi Universal had formally decided to put the entertainment assets on the block, a decision the company announced at its shareholder meeting last month.
He said Vivendi chairman Jean-Rene Fourtou received his overture “warmly and with friendship. But he will obviously do what’s in the best interests of Vivendi shareholders.”
Bronfman’s bid is backed by Wachovia Bank and a number of private equity investors have either committed to it or are considering joining.
Bronfman said he made the offer because “these businesses belong together and I want to keep them intact. I built these management teams and helped them build the businesses. I know there is more value out there.”
He said the major difference between his offer and Marvin Davis’ is that “we have a strategic partner who will strengthen the bid.”
Asked about the value of his offer, he said, “No other bidder has described their price and I’m not going to describe mine. We will get into the room and do the due diligence.”
The former CEO of Seagram, whose family is Viv U’s single largest shareholder, will suspend his participation with the Viv U board of directors, as will his father, Edgar Bronfman Sr., in order to pursue the buyout.
The partners plan to create a private entity that would add Cablevision’s stable of cable networks to Universal’s film, television, theme park and music businesses. Bronfman would take over as CEO of the compnay.
Cablevision’s Rainbow Media subsid owns the AMC, IFC and WE (Women’s Entertainment) nets. The New York cabler would receive a stake in the new entity.
“Vivendi’s entertaiment properties are very atrractive assetes,” a Cablevision spokesman said, “overseen by a strong management team. We believe that these assets could potenetially fit well with certain Rainbow properties. We have high confidence in Mr Bronfman’s leadership and look forward to the opportunity that lies ahead.”
Viv U is also likely to a retain a chunk of the new company to avoid a hefty tax penalty.
The logic of teaming up with Cablevision is apparently to give the new entity a critical mass in cable programming. Universal Music and Universal Film are already heavyweights in their respective industries.
But the cable nets USA and SciFi, while attractive, don’t put Universal in the same league as Viacom, Disney or AOL Time Warner.
Rainbow “will put it on a much firmer footing,” a person close to the discussions said.
Bronfman will be up against a consortium led by Davis and orchestrated by Bronfman’s former chief financial officer at Seagram, Brian Mulligan. That offer is said to be worth $20 billion.
Brofman apparently thinks the package is worth more.
John Malone’s Liberty Media is also vying for the VUE assets, possibly in partnership with Barry Diller. Other interested parties include Viacom, General Electric and MGM — which, coincidentally, owns 20% of the Cablevision networks.
If successful, the offer would bring Bronfman full circle. He transformed Seagram into a media and entertainment company by buying Universal Studios and then Universal Music. He sold the whole company to Vivendi three years ago in the wake of major media mergers by AOL and Time Warner and Viacom and CBS.
Since the merger, Vivendi Universal stock has lost 80% of its value and the company narrowly averted bankruptcy. Bronfman has been working closely with Viv U chairman-CEO Jean-Rene Fourtou to devise a comeback strategy. The French company declared last month that the strategy included a sale of the entertainment assets.
Bronfman knows the assets well and, a person close to him said, “thinks their best days are in front of them and their value can be enhanced.”