Forget for a moment Hollywood’s current obsession: that Seagram’s dashing 38-year-old president, Edgar Bronfman Jr., will use his swelling stake in Time Warner to take over the entertainment conglomerate. The bigger picture is that Bronfman, once dismissed as a star-struck rich kid, now has the muscle to become a player. His 11.7 percent interest in Time Warner may be his first foray into the fast lane of the Information Highway, but it won’t be his last. “Entertainment and information companies will be the giants of the next decade,” he told NEWSWEEK. “We intend to be a part of that.”
But no one seems to be listening to Bronfman when he says his Time Warner investment is simply part of a larger strategy. Bored with Paramount, Hollywood needs a fresh takeover battle. Will Bronfman settle for a passive role at the media empire? Or will he team up, as some have suggested, with a mystery backer to challenge CEO Gerald Levin?
The rumor mill started spinning in May, soon after Bronfman began buying stock in the company that owns Warner Bros. studios, Time Inc. magazines and cable systems. It went into hyper-drive recently after Time Warner resurrected a “poison pill” to flood the market with new shares should Bronfman try to lift his stake above his 15 percent target. Time Warner insiders say Bronfman’s past is proof positive of his intentions: he began his career as a movie producer and pop-song lyricist. “This is a guy who thinks he got a raw deal in Hollywood and wants to return like the conquering hero,” says a Time Warner lawyer. Bronfman’s bio leaves him vulnerable to such suspicions. At 17, he bypassed college to make movies, using the clout of his family’s $4 billion fortune to raise money for such duds as “The Blockhouse” and, in 1982, “The Border” with Jack Nicholson. He also wrote pop songs, including “Whisper in the Dark,” which was recorded by Dionne Warwick. In 1980, when he was 24, he eloped with a friend of the singer’s, Sherry Brewer, an actress with whom he had three children. Divorced since 1991, he plans this year to marry a Venezuelan oil heiress. Tall and as handsome as a soap star, it’s not hard to imagine him sipping Perrier-Jouet at Spago with two of his close friends, TV mogul Barry Diller and superagent Mike Ovitz.
But he has shed his image as a nightclubbing dilettante since joining Seagram. In charge of day-to-day operations since 1988 when he took over from his father, he has pushed the company beyond North America and dumped lowbrow brands like Wolfschmidt vodka. Although critics say he overpaid for upscale Martell cognac, the move helps overseas, where spirits sales are still climbing. In October he won a big one, wrestling away from Grand Metropolitan PLC the right to distribute Absolut vodka.
From the beginning he has insisted that his intentions toward Time Warner are as well measured. His family’s long-held 23 percent interest in Du Pont should be proof of that. “We are investing in Time Warner because it is a wonderful company,” he says. “If I wanted to own a movie studio, I could have bid for Paramount.” The poison pill prevents him from staging a creeping takeover like the one Larry Tisch pulled off at CBS, so his only choice would be to buy Time Warner outright. But that would be difficult; the heavily indebted company is partly owned by Baby Bell US West and two Japanese corporations. “Time Warner is a $35 billion company,” says Bronfman. “What exactly am I supposed to be using to take it over?”
Conspiracy theorists think they know. Maybe Bronfman is backed by a Canadian consortium. Or fronting for his pal Diller, who is using the Paramount battle to mask his real goal, taking over Time Warner. And hasn’t Mike Ovitz been looking for a way to grab Levin’s job? Such delusions aside, the Time Warner stake is the beginning of a new era at Seagram. The liquor business is past its prime and it’s no surprise that Bronfman, like others, thinks the future belongs to the technologically ambitious. “How can you blame the guy for trying to bring his company into the next century?” asks Paine Webber’s Chris Dixon.
Bronfman’s motives may not be as nefarious as Time Warner insiders fear, but he is far from harmless. The Seagram scion is likely to angle a seat or two on the board and, at the least, use his stake to learn more about the business. With media deals escalating, Bronfman may use the $6 billion firm’s cash–perhaps profits from selling his Time Warner stake, he hints-to make acquisitions. Says a close adviser: “He has shown he means business.” It may become clear soon whose business he means.
