From the fourth-floor conference room windows of Edgar Bronfman Jr.'s midtown Manhattan venture capital firm, the Seagram Building rises like a specter above the affluent Park Avenue foot traffic--a constant reminder of what the Bronfman empire once was. A plaque on one of its marble walls declares the skyscraper to be the last masterpiece of legendary architect Ludwig Mies van der Rohe and, thus, a New York historic landmark to be forever labeled Seagram. Never mind that Bronfman orchestrated the sale of his family's company three years ago to finance his dream of a global media empire built around Universal Studios.
During four hours of interviews in September, after he failed in his bid to buy back the entertainment company he once controlled, Bronfman was eager to point out that the family liquor dynasty began disintegrating years earlier. Seagram hasn't owned the building since 1979, he noted. Still, until last spring, he continued to work out of the Seagram Building.
But that was last year. Edgar Jr. has since moved across the street to the Lever House, where he has a clear if melancholy view of the building that stands like a lost family heirloom. Edgar Sr., now retired, and as fortunate a dealmaker as ever trod Wall Street, was once Edgar Jr.'s staunchest supporter. Nowadays he doesn't say much about Seagram, his son, or the expensive Hollywood gamble that cost the Bronfmans Universal, their liquor business and a good portion of their multibillion-dollar fortune.
By some estimates, the Seagram wealth has dissipated by at least $2 billion during Edgar Jr.'s more than five-year stewardship. His latest effort to win some or all of it back failed, when he lost a desperate bid to regain Universal. And while there will never be a tin cup in any of the Bronfmans' futures, the double loss of Seagram/Universal--first in 2000 to the French telecom giant Vivendi, and again this fall to General Electric's subsidiary of NBC--has split the family and been a jagged little pill for Edgar Jr. to swallow.
How was he able to lose so much of the family fortune in such a short time?
Bad timing and worse luck had something to do with it, but part of the answer lies in the personality and family history of Bronfman himself. He continues to spout well-rehearsed bizspeak about amorphous plans, and to claim that Vivendi shareholders were the real winners. But among his former Hollywood associates who view his lost grip on Universal as a failure, his is a weak argument.
On a September afternoon, Edgar BronfmanJjr. sits at his usual see-and-be-seen power table at the center of the perennially chic Four Seasons restaurant in midtown Manhattan. He is wearing a custom-tailored jacket over a slightly rebellious crew-neck sweater in a restaurant that has had a dress code for a generation.
At 48, Bronfman looks at least a decade younger. He first grew his closely trimmed trademark reddish-brown beard to overcome a perception of immaturity, and that slightly scruffy appearance, paired with his tailored wardrobe, suits him. Before ordering cracked crab on ice, he carefully covers the edge of the linen tablecloth with his own napkin to avoid a mess; then Bronfman attends to the needs of his guests: Have they ordered? Did they get anything to drink? Bronfman seems to care about others, sometimes to a fault. An avowed foe has described Bronfman's attentiveness as "feigned obsequiousness," but it certainly appears genuine.
Bronfman drinks only water for lunch, though he says he has sampled his share of Seagram's finest. When he addresses the Seagram/Vivendi debacle, among his first concerns are for the shareholders whose livelihood and pensions depended upon him. It's hard to tell whether this is heartfelt or noblesse oblige because Bronfman can switch without warning from deferential to defensive. He plays many roles: heir, pop-culture maven, student of Wall Street, would-be tycoon.
Last winter, he cast himself in the self-described role of "lion tamer" to a group of unruly private investors, pulling them together long enough to tender a $13-billion bid to buy back his Universal empire. He kept an unusually high profile throughout the summer, and by September, when Vivendi chairman Jean-Rene Fourtou promised to name a winner, it looked as though Bronfman might have triumphed. Up to that point, every Hollywood high-roller from MGM's Kirk Kerkorian to Viacom's Sumner Redstone had dropped out of the bidding for Universal, its USA, Sci Fi and Trio cable channels, and its theme parks. Their reasons were simple: Vivendi wanted too much money.
But Bronfman, who had stepped down from his vice-chair position on Vivendi's board in May to join the bidding, had a score to settle, as well as a fundamental belief in Universal's intrinsic value. The studio might not currently be worth the $14 billion Vivendi was demanding, but Bronfman thought the asking price was close enough that he meant to stay in the game to the end.
Then, on the morning after Labor Day, when Bronfman prepared to bask in the limelight as the once and future mayor of Universal City, Vivendi's Fourtou announced the $14-billion NBC deal. With combined assets still trailing such giants as Time Warner, Fox, Disney and Viacom, the new NBC Universal was estimated to be worth $43 billion and reportedly capable of generating annual income of $13 billion--a formidable player in the global mass media sweepstakes in which Bronfman had hoped to share.
"Naturally, I was disappointed," Bronfman says. He puts the best face on his defeat by asserting that his bidding war with General Electric forced the company to pay the highest possible price for Universal. Indirectly, the extra $1 billion that GE paid will benefit all the Vivendi stockholders, including the Bronfman family. "I got value for the shareholders," he says, a mantra that he repeats through two days of interviews as consolation and his own personal reassurance.
If he is shocked or bitter at the NBC deal, Bronfman refuses to show it. Nor does he miss a beat in happily announcing that his next business venture will be a gala stage production of "Never Gonna Dance," based on the Depression movie musical "Swing Time," due to open on Broadway on Dec. 4. Just five days after losing the biggest deal of his life, Edgar Bronfman Jr. blithely steps from the role of billion-dollar lion tamer to song-and-dance impresario.
"We're in rehearsals now," he says. What's more, the Fred Astaire/Ginger Rogers revival looks splendid, except for some minor problems with the script. The two-act structure is too obvious and needs to be less abrupt, more subtle, he suggests. The audience should be entertained without being able to detect the architecture upon which the story is built.
Bronfman's swing from boardroom to Broadway might strike some as odd, but in a way it makes perfect sense, given his family roots. To hear his many Hollywood business associates tell it, Edgar Bronfman Jr. is two very different men housed in the same person: one, an occasionally ruthless, frequently feckless business tycoon; the other, a bona fide romantic who once wrote love ballads for Dionne Warwick and Celine Dion and tried his hand at heart-tugging storytelling for stage and screen.
His manner is courtly and his disposition cheery. But there is no better measure of each side of Bronfman's dueling personality than a thumbnail description of his two favorite movies--"Cabaret," which dances decadently through the rise of Nazi Germany, and "The Godfather," which chronicles multigenerational corruption and loyalty within a Mafia family. Though the Bronfmans were never the Corleones, the family dynamic and fortunes of each clan--the real and the fictional--certainly have their similarities.
In Yiddish, Bronfman roughly means "whiskey man," and as Canada's premier bootlegger, Bronfman's grandfather more than lived up to the name. Sons of Russian Jews who escaped the czar's pogroms by immigrating to Canada, Sam Bronfman and his three brothers opened a liquor operation in a Montreal suburb just after World War I. It mushroomed into a multimillion-dollar industry during the Roaring '20s, when alcohol was forbidden south of the Canadian border. The brothers Bronfman earned windfall profits selling whiskey to smugglers who took it across the St. Lawrence River and the Great Lakes. The Bronfmans then used their considerable cash to buy Joseph E. Seagram & Sons in 1928 and, later, to purchase control of Britain's Distillers Company Limited in 1933.
The brothers were arrested and charged with tax evasion in connection with their liquor business in 1934, but the case was tossed out of court the following year because the government could not produce enough documentation to prove that the Bronfmans had evaded $5 million in taxes on liquor they had shipped to the U.S. For the next two generations, Seagram was synonymous with hard liquor and hard cash, and Sam was described during the famous Kefauver hearings on organized crime in the early 1950s as Canada's top bootlegger.
By then, Sam had edged out his brothers to become undisputed master of Seagram and head of one of North America's great family fortunes. But all the cash in Canada wouldn't buy him respect. Sam contributed millions to political candidates, cultural institutions and Jewish charities, but he could not bury a past that included operating a string of hotels along the Canadian side of the U.S. border that were rumored to be brothels. Maclean's magazine columnist Peter C. Newman chronicled the Bronfman dirty linen in his 1978 bestseller "The Bronfman Dynasty," while Canadian novelist Mordecai Richler savaged the family in the sprawling 1989 roman a clef "Solomon Gursky Was Here." Though Edgar Jr. maintains he has spoken with neither author nor read their books, thousands of others have, including many of those who work for him.
"Are you kidding?" says an attorney who worked for Bronfman. "It was required reading! Edgar is haunted by family guilt."
There are silver spoons and gold ones, but Edgar was born gumming platinum, the second child of Sam Bronfman's eldest son and an heiress to the Loeb investment banking fortune. But even before Edgar Jr. was born, schisms plagued the Bronfmans. In the course of wresting Seagram away from his younger brother, Allan, Grandpa Sam split the Bronfmans, pitting cousin against cousin so that today there are two Canadian dynasties: the Montreal Bronfmans, who operated Seagram, and the Toronto Bronfmans, whose fortune came from real estate, manufacturing and mining. In part, it was this intergenerational internecine warfare that sent Edgar Sr. packing across the border to New York City in the 1950s.
"My father wanted us to be U.S. citizens," says Bronfman, and so he and his six siblings were born in New York.
Bronfman glances out his conference room window at the Seagram Building. From his circumscribed world inside the beating heart of midtown Manhattan, he notes that he has lived elsewhere from time to time (including Malibu during the early 1980s, when he tried his hand at independent film production) but has always returned to New York. His reasons are as simple as the fantastic selection of restaurants, Broadway, culture and metropolitan excitement, but they also involve a complex approach-avoidance relationship with his own family
From the beginning, Bronfman showed scant interest in the family business. The early assumption was that Seagram would pass to Edgar Sr.'s eldest son, Samuel, just as Grandpa Sam had turned over the reins to his eldest son. During his own tenure as Seagram chairman, Edgar Sr. transformed the Bronfman millions into billions through a series of smart, fortunate investments and global marketing campaigns that made Seagram products such as Chivas Regal scotch and Absolut vodka into the world's most popular brands.
Edgar Jr. cared little about whiskey, but he was intrigued by power. "When I was 13, I watched my father handling someone on the phone," he recalls. "It was the first time I realized just how powerful he really was. After he hung up, I said, 'You're really powerful, aren't you, Dad?' And he said, 'If it shows that you have to use your power, you aren't really powerful.' "
Besides his adolescent fascination with power, Bronfman's other real interest was motion pictures. At 16, he became a gofer, or "tea boy," on the set of British producer David Puttnam's 1971 feature "Melody." In 1982, the young Bronfman produced the Jack Nicholson drama "The Border."
And though he would have preferred that his son attend college, Edgar Sr. did not disapprove of this Hollywood fling. Over his own father's objections, Edgar Sr. had also dabbled in Hollywood, briefly serving as chairman of Metro-Goldwyn-Mayer in 1969. When the elder Edgar first began buying into MGM, Sam Bronfman reportedly asked:
"Tell me, Edgar, are we buying all this stock in MGM just so you can get laid?"
According to Newman's "Bronfman Dynasty," Edgar Sr., who was married to the first of his five wives at the time, replied: "Oh, no, Pop, it doesn't cost $40 million to get laid."
At 24, Edgar Jr. eloped with Sherry Brewer, an African American actress whom he reportedly met through singer Dionne Warwick. (Bronfman co-wrote the pop ballad "Whisper in the Dark" for Warwick.) Edgar Sr. refused to speak to his son for more than two ...years. They didn't fully reconcile until 1982, after Samuel's well-publicized kidnapping and after Edgar Sr. declared his eldest son "too nice" to run the family business. Edgar Sr. floored Edgar Jr. by asking him to join Seagram as special assistant to the president, and perhaps someday take over the company.
For the next 12 years, Edgar Jr. worked his way up to chief executive officer at Seagram, learning all aspects of the family business. But he never gave up his Hollywood dreams. In 1993, he directed the company's bean counters to accumulate a 14.9% stake in Time Warner. By 1995, with the stock stagnant, Seagram turned its attention to a smaller outfit with an equally glitzy pedigree: Universal Studios, which had been swallowed by MCA in 1962.
As the newest steward of the Bronfman family fortune, Edgar Jr. opted to dump liquor in favor of the silver screen. Edgar Sr. vowed never to second-guess his son's decisions the way his own father had, but Edgar Sr.'s younger and far more conservative brother (and Edgar Jr.'s uncle), Charles Bronfman, was not so laissez-faire. During his many years as Edgar Sr.'s co-chair at Seagram, Charles' investments on behalf of the company might have seemed stodgy, but they were always solid, including the jewel in the Seagram crown: a 24% stake in the perennially profitable chemical giant DuPont. When Bronfman proposed selling off DuPont along with the Time Warner stock to raise the money to buy MCA, he risked a civil war. "From shirt sleeves to shirt sleeves in three generations," his grandfather once predicted of family fortunes, but Edgar Jr. would not be dissuaded.
His father backed him. And rather than ignite another epic struggle like the one that split the Bronfman family in the 1950s, Charles went along with his brother and nephew.
Bronfman won't speak about his grandfather nowadays, or any other member of his family for that matter. His rules for the interviews demand no discussion of his relatives and no tape recorders. He is painfully aware of how his own words about his family have come back to haunt him.
Eight years ago, Bronfman declared that he was not going down in history "as the one Bronfman who [squandered] the family fortune." He would take Seagram into the 21st century a stronger, richer, more diversified and more influential business than ever.
"I went in with my eyes wide open, but it turned out to be a disaster," he said in a 2002 interview with Forbes magazine.
The MCA/Universal venture did not start out a losing proposition. Even his harshest critics concede that buying an 80% stake from Matsushita Electric Industrial Co. for $5.7 billion was a very good deal, though some quibble over Bronfman's assertion that he took a fixer-upper and rebuilt it into a Hollywood powerhouse. In fact, the studio seemed to produce nothing but flops during Bronfman's first two years.
Shortly after the Seagram takeover, Premiere magazine reporter (and now Times staff writer) John Horn quoted Bronfman as saying at a rough-cut screening of the 1998 box office bomb "Meet Joe Black": "I loved every minute. Don't change a frame." This of a movie that critics universally panned, mostly because it was nearly three hours long.
Beyond his questionable commercial taste, Bronfman approached movies with the marketing logic of a liquor wholesaler. At one point, he proposed that theaters charge higher prices for more expensive movies, just the way Seagram charges more for its single-malt Scotch over the lower-priced blended varieties. Why, Bronfman argued, should a customer pay the same amount to see a $2-million movie as a $200-million one? But the few instances where studios have attempted to charge premium admission prices for a movie have failed.
Still, from his redecorated office penthouse overlooking Universal Studios during the mid-1990s, Bronfman's brave new world appeared promising. In 1995 he hired Ron Meyer, then president of Creative Artists Agency, to run the operation, and today credits Meyer with resurrecting Universal. But Bronfman had entered the game at the very moment that old Hollywood was giving way to an uncertain and volatile new Hollywood, dominated by digital technology, fiber optics, computer graphics, satellite communications and a fractious new wild card known as the Internet. Amid this tumult, Universal was still making movies the old-fashioned way, on creaky old sound stages that were becoming irrelevant.
In terms of cash flow, by the mid- to late-'90s movies were playing second fiddle to television, which drove the industry. Rivals such as Viacom, Fox, Warner and Disney owned whole networks as well as cable outlets, but outside of USA and the Sci Fi channel, Universal had no TV presence and had evolved into just another production house desperately trying to get NBC, HBO or CBS to buy one of its pilots.
In 1997, Bronfman aimed to solve this problem by engaging Barry Diller, one of his oldest Hollywood acquaintances, to run the TV side of the business.
As Rupert Murdoch's guiding light in creating the Fox Network during the 1980s and master of the lucrative Home Shopping Network during the '90s, Diller seemed the perfect choice to run Universal TV. But Diller stopped being a hired hand the day he split with Murdoch. He would no longer take on a task unless he had a piece of the action. Without consulting Meyer or any other Universal executives, Bronfman gave Diller what he wanted.
In a set of complicated deals worth $4.1 billion, Diller paid $1.2 billion in cash for USA Networks and gained total control of Universal TV, though Bronfman retained a 45% stake. Bronfman says he saw no downside because Universal would get 45 cents of every dollar Diller earned and, with Diller at the helm, Universal TV would only increase in value. If Diller died or quit, according to the agreement, control of Universal TV would revert to Seagram. The deal also gave Bronfman cash to pour into the one area of his new entertainment empire where he felt most comfortable: MCA Music.
Outgoing PolyGram CEO Alain Levy warned Bronfman that the music business is "more dangerous than astrology" and was growing more so every day with an industry-wide decline in CD sales and the emergent plague of Internet file swapping. Still, Bronfman launched a wholesale takeover of the world's pop music business. In 1998, he paid a whopping $10.4 billion for the PolyGram record label. The resulting Universal Music Group, with more than 30% of the market, became the global leader in the pop-music business at the start of a precipitous profit slide that has yet to end.
But Bronfman's biggest and most disastrous deal was yet to come.
Even now, Bronfman is wedded to the "content is king" buzz phrase so popular during the pre-bust dot.com boom. In Universal's vast and venerable film library alone, the Seagram heir had purchased enough content to last a lifetime. What he needed was a cost-effective way to get those thousands of movies and TV programs to the masses.
In 1999, at an October breakfast meeting during a vacation stopover in Paris, Bronfman found his visionary alter ego in a Frenchman named Jean-Marie Messier. Like Bronfman, Messier saw a future dominated by a handful of multimedia giants; like Bronfman, Messier wanted to control the Internet, but was hazy on how to go about it; and, just like Bronfman, Messier was trying to streamline a stodgy old-line company into something quite different.
Under Messier's direction, a century-old French water and sewage utility called Vivendi was being upgraded to a telecommunications giant that presumably would take its place alongside Murdoch's News Corp., Redstone's Viacom, Disney and AOL Time Warner as one of the 21st century's great media companies. Was it not kismet that Messier and Bronfman should meet this way?
Bronfman had ambitions far larger than his family fortune. Even with their billions, he knew the Bronfmans could not compete on a global level with the media conglomerates. But as one of France's largest companies and a pioneer in European cellular, satellite and cable technology, Vivendi afforded an opportunity to merge Universal's movies, music and television programming with a major European distributor, putting Universal on par with the other players. At least, that's what Bronfman believed would happen.
In the spring of 2000, Bronfman opened negotiations with Vivendi. He more than doubled the $43 a share at which Seagram/Universal was then trading and asked that Messier pay $100 a share to acquire the onetime Bronfman blue chip. Messier countered with $77.35, and Bronfman and his kin decided to swap Sam Bronfman's company for an 8.6% stake in Vivendi. On paper it made them by far the biggest shareholders, though they hadn't a dime to show for it because they took it all in stock.
In June of 2000, the Seagram/Vivendi odd couple announced their intercontinental marriage. The tall, bearded Bronfman became vice-chairman and his animated Gallic sidekick was now chairman of Vivendi Universal Entertainment, or VUE, second only to AOL Time Warner as the world's largest media company with combined assets worth more than $100 billion.
Ron Meyer smelled trouble the first time he heard Messier waxing on and on about "synergy" without offering any real explanation as to what he meant. Before Bronfman realized what Messier was doing and could persuade the rest of the Vivendi board to rein him in, Messier had burned through the company's capital reserves in record time, as if every deal was his last one.
"He just kept buying everything in sight, like a kid in a candy store," Edgar Sr. later told an interviewer for Cigar Aficionado magazine. "And he didn't care what the price was."
During the six months between the announcement of the Vivendi/Seagram deal and close of the merger, the dot.com bubble burst. The impact on the Bronfman stake in Vivendi was both immediate and catastrophic. Instead of the promised $77.35 share price, their VUE stock had plunged in value to $54 a share by the time the deal finally closed in December 2000. It was the first sign that young Edgar's luck, or business judgment, had gone from bad to just plain awful.
From the moment Messier took over as the new company's CEO, he lavishly displayed his nouveaux riches in a lifestyle he saw fitting that of a media baron, beginning with the corporate purchase of a $17.5-million duplex penthouse on Park Avenue.
He immediately put the liquor business up for sale. Charles Bronfman, Edgar Jr.'s uncle, considered buying Seagram back, but ultimately refused to pay a premium for a business that the Bronfman family had owned for more than half a century. Seagram liquors, which still generated about $6 billion in annual sales, was sold to a pair of rival companies for $8.1 billion and has continued to stolidly churn out profits.
With the cash from the Seagram sale in hand, Messier went shopping. He spent an average $1 billion a month from December 2000 through June 2001, buying everything from a U.S. textbook publisher to a Hungarian telecom company. He also spent $10 billion to buy back USA Networks from Barry Diller, enriching Diller while further depleting Vivendi's reserves.
In less than 18 months, Messier single-handedly spent 70% of the Bronfman family fortune, and would have gone on spending if the Bronfmans hadn't come together to stop him. Though Seagram held only five of the 19 seats on the Vivendi board, Edgar Sr. and Charles united one final time behind Edgar Jr. to protect their fortune from further erosion. For months, the younger Bronfman says he personally lobbied the mostly French Vivendi board for the additional five votes that it would take to overthrow Messier.
"When you're trying to take out a CEO," he says, "you only get one bullet."
It took Bronfman precious months to muster the votes. Meanwhile, the Messier splurge continued. Finally, during Vivendi's annual meeting in June 2002, the Bronfmans succeeded in ending Messier's disastrous reign.
By year's end, Messier had come under investigation by both the U.S. Securities and Exchange Commission and the French government for alleged misuse of corporate funds and fraud. Those investigations are continuing. After French authorities searched his Parisian home and offices, confiscating cartons of Vivendi documents, Messier transitioned into life as a New York-based investment banker while he took Vivendi to court in a fight, still pending, for a $23-million severance package.
Meanwhile, the company confronted its staggering debt. Thirty billion dollars of red ink sent VUE stock into freefall. Jean-Rene Fourtou, a former pharmaceutical executive, became the company's new CEO, and his orders were simple: raise at least $10 billion or face bankruptcy.
And, thus, the stage was set for the latest act in Edgar Bronfman Jr.'s Hollywood drama.
The curtain went up earlier this year on a largely symbolic auction to help Vivendi raise the $10 billion and avoid bankruptcy. On the block was the famous Seagram art collection--Picassos, Miros, Rothkos and Rodins--that had been on display for more than a generation in the equally famous Seagram Building. Charles and Edgar Sr. had no comment, but their older sister, Phyllis Lambert, has called the art sale, one of several, the sad denouement of "a whole Greek tragedy."
Even as the last remnants of the Seagram empire went on the auction block, the younger Edgar was laying plans for one final attempt at snatching back most of his lost empire. In May, he unveiled a plan to join the scramble for VUE's entertainment assets. Although his father was firmly behind the move, glaringly absent from his list of investors was Uncle Charles.
"Edgar is a smart, intelligent, thoughtful guy," says a former colleague. "He is not a lightweight. I think the issue, of course, is that sometimes in life you just get dealt some bad luck, and everything depends upon what you do next. He's got a ways to go to retrieve his reputation."
Despite a well-fought campaign, Bronfman's consortium of private investors lost out to General Electric. Bronfman gave a postmortem on CNBC's "Special Report." He dodged host Maria Bartiromo's questions about his plans, including a pointed inquiry as to whether he might be tempted to purchase Universal Music--the one entertainment division that Vivendi held onto during the auction of VUE assets.
Like his father and his grandfather before him, Bronfman has grown accustomed to power, and he likes it. He wears it easily and tries not to be too obvious, remembering the lesson his father taught him when he was 13. But lately, it has been made manifestly clear to him that power is not always enough.
Sitting in his office conference room, Bronfman recalls the morning of Sept. 11, 2001, after the first plane hit the north tower of the World Trade Center. He was 3,000 miles from home, in Los Angeles, at the time. He panicked, watching with helpless dread, thinking of his wife, Clarissa, and the seven children he has from his two marriages and how powerless he was to help them.
A man like Edgar Bronfman Jr. should be able to control his life, he reasoned, at least to the extent that he can protect his own family. He was remembering that feeling again two years later, wondering once more just how much, or how little, he truly can control.