Seagram Plans to Sell $1 Billion in Assets

Seagram Co., which last week completed its $10-billion purchase of most of PolyGram, plans to sell as much as $1 billion of assets during the next two years as it tightens its focus on entertainment.

The company didn’t identify which assets it is targeting, though analysts expect it to sell pieces of PolyGram’s film business and some of its beverage brands. Seagram also said it expects to report fiscal second-quarter profit of about 2 cents a share before a charge, unchanged from last year.

Seagram faces the daunting task of combining PolyGram with its Universal music and film operations as part of Chief Executive Edgar Bronfman Jr.’s strategy of relying more on the entertainment industry. Seagram early last week set the structure of its combined music business and today laid out for investors its growth forecasts and plan for asset sales, which could be used to pay down the billions of debt it took on in buying PolyGram.

“What investors want to see is for them to be able to grow the company and manage the debt simultaneously,” said Barry Hyman, analyst at Ehrenkrantz King Nussbaum Inc.

Montreal-based Seagram, which bought its 75% stake in PolyGram from Royal Philips Electronics, sees its future growth mainly in music and theme parks.

“Our growth prospects are real and immediate . . . and we will deliver on the promise of this transformation in each of the next few years,” Bronfman said in a prepared statement.

Seagram on Monday reiterated that it expects to take a charge related to the PolyGram purchase of as much as $700 million in the fiscal second quarter ending Dec. 31.

The company also said it expects to report pro-forma cash flow for the second quarter of $670 million, which includes PolyGram’s results. Seagram didn’t provide a year-ago comparison. Without PolyGram, cash flow would be $325 million, Seagram said.

Bronfman said growth in the music business during the next couple of years will be driven by cost cutting, with further growth coming from advancements in technology such as the Internet and electronic commerce.