Rumors Swirl as Seagram Posts Winning Results

Seagram Co.’s stock soared on Thursday as the company’s quarterly profit substantially beat Wall Street’s expectations while speculation continued that all or part of the company might be sold.

Seagram shares rose $4.38 to $60.19 as profit from operations totaled $522 million, or $1.19 a share, in its fiscal second quarter, thanks to cost cuts and stronger music and theme park results. Wall Street analysts on average had expected $1.04 a share.

Chief Executive Edgar Bronfman Jr., while not addressing the rumors directly in a conference call with analysts, put something of a damper on sale speculation when he declared, “I intend to be CEO of this company for a long time,” and, “I like the businesses, all of them, that we are managing and plan to continue to manage them.”

Bronfman said he is “angry and frustrated” with “inaccurate speculation” about Seagram’s future, which has been the subject of daily rumors the past month. Many have speculated that he would shed the Universal Studios Inc. movie and theme park businesses.

USA Networks Inc. chief Barry Diller and DreamWorks SKG have discussed various potential combinations in the past, but those discussions so far have gone nowhere. News Corp. President Peter Chernin said this week that News Corp. hypothetically would at least look at Universal if it were on the block, although sources at the company have privately expressed skepticism.

And scores of other names continue to pop up, from AT&T; Corp. to Microsoft Corp. So far, there is no hard evidence of any deal in the making, although people close to Bronfman insist that he would listen to proposals if the price were highly lucrative.

Seagram’s $522-million quarterly profit compares to just $18 million a year earlier. The company said losses narrowed significantly at its film studio, due partly to video sales of “Notting Hill.”

The company’s music operation boosted results by trimming its roster of artists.

Bronfman said that Seagram’s cash flow--earnings before interest, taxes, depreciation and amortization--would reach $1 billion for its fiscal year. For the quarter, it was $465 million. In the conference call with analysts, Bronfman spent much of the time talking about how Seagram plans to exploit distribution of music over the Internet, an area Wall Street is especially enamored with in the wake of Time Warner Inc.’s proposed mergers with America Online Inc. and music company EMI Group.

Seagram’s quarterly revenue was down slightly at $4.97 billion, due to currency fluctuations and the sale of its concert business.

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Bloomberg News was used in compiling this report.