Viacom Has Shown Bad Faith, Bronfman Testifies

Seagram Co. Chief Executive Edgar Bronfman Jr. testified that Viacom has shown “a consistent pattern of bad faith” during more than a year of attempts to negotiate a resolution of the dispute over their cable TV partnership, USA Network.

Bronfman also said his relationship with Viacom Inc. Chairman Sumner Redstone has deteriorated to the point where “trust is a hard thing to come by.”

Bronfman was testifying on the sixth day of a Delaware Chancery Court trial that’s likely to come down to a question of whether Bronfman or Redstone, who is to testify today, is the more credible witness.

Seagram sued New York-based Viacom in April, claiming that Viacom violated the USA Network partnership agreement by starting another cable network, Nick at Nite TV Land. Viacom countersued, claiming MCA’s suit is a pretext to force it to sell its interest in the USA Network.

New York-based Seagram is a partner in USA through its ownership of MCA Inc., the movie and television production company it bought last year. Viacom acquired its interest in USA in 1994 when it bought Paramount Communications Inc. Paramount and MCA entered their USA partnership agreement in 1981. That agreement requires the partners and all affiliates--including acquirers--to operate or own cable TV channels only within the partnership.

Viacom owns TV Land and other so-called MTV Network channels such as MTV, Nickelodeon/Nick at Nite and VH-1.

Bronfman said Monday that he verbally agreed with Redstone in February to allow Viacom to launch its new Nick at Nite TV Land channel in exchange for Viacom’s releasing its former CEO, Frank Biondi, from restrictive legal obligations that prevented him from going to work for MCA. Redstone had fired Biondi as CEO of Viacom.

However, Bronfman said, Viacom began drafting agreements that released Viacom from all potential litigation. He accused Redstone of trying to “leverage” the release of Biondi, who was restricted by noncompete provisions of his Viacom contract.

“If you think we want Frank Biondi that badly, you’re crazy,” Bronfman said he told Redstone. Bronfman said Redstone subsequently released Biondi with no strings attached.

Viacom accuses Seagram of reneging on an agreement Redstone reached verbally with Bronfman.

A few weeks before filing the lawsuit, Bronfman said he consulted with former MCA Chairman Lou Wasserman, who told him, “ ‘Edgar, that’s [litigation] the only language Sumner understands.’ ”

When Bronfman told Redstone Seagram planned to sue, Redstone said, “ ‘If you want a war, Edgar, you’ve got one,’ ” Bronfman testified.

On Friday, Viacom and Seagram ended the latest attempt to settle their lawsuit.