Bronfman to Quit Vivendi Management

Edgar Bronfman Jr., the Seagram liquor scion who bet his family’s fortune buying Universal Studios Inc. before selling it last year to France’s Vivendi, formally cut his day-to-day ties to the entertainment business Thursday, saying he wants to eventually manage his own company again.

Bronfman resigned his management role at media giant Vivendi Universal, home of such film hits as “Jurassic Park III” and “The Mummy,” the Universal Studios theme parks and such music acts as No Doubt, Eminem and Ja Rule.

He remains a director and vice chairman of the board, and his family continues as the company’s largest stockholder, with a 6% stake. His departure further solidifies the grip on the company by Chairman and Chief Executive Jean-Marie Messier, who is trying to build Vivendi Universal into one of the world’s premier media companies from his new base in New York.

For his part, Bronfman, 46, said he has been considering leaving for months, and acknowledged that his timing was influenced by a lucrative contractual escape clause that was to have expired early next month. Bronfman said that although he and Messier work well together, it was clear there isn’t enough room at the top to accomplish his goals.

“I’ve got a broad set of skills, and I want to use as many of these skills as possible,” Bronfman said. “There’s not the opportunity to do that.”

Bronfman’s move into entertainment produced mixed results. Bronfman vowed to tame the entertainment business, bringing costs into line and producing the most talent-friendly studio in the business. But, as he admitted Thursday, “it was ugly at times.”

Bronfman is credited with building Universal’s music business into the world’s largest but failed to acquire the kind of television and cable distribution channels some analysts believe the company needs.

Messier said in an interview that he was disappointed but not surprised at Bronfman’s decision because the two had discussed the possibility at the time Vivendi bought Seagram, a deal that marks its first anniversary this week.

“It was clear that he was No.2 and no longer No.1,” Messier said, adding that it was only normal for a young executive such as Bronfman to seek other opportunities.

Messier credited Bronfman for playing a key role in creating a “smooth integration of two cultures” at Vivendi, which so far has produced solid results, although Messier has struggled since the merger to sell his vision to Wall Street. Messier also credited Bronfman with smoothly bringing his top executives into the Vivendi fold following the merger.

“He has been very successful in choosing the right set of people,” he said. “Edgar is leaving now because he has delivered what he has promised to deliver.”

Bronfman is the second top media mogul forged during the 1990s to announce a departure this week, with AOL Time Warner Inc. Chief Executive Gerald Levin disclosing Wednesday that he plans to retire in May. Although Bronfman is one of the youngest of the moguls, his leaving marks a further sign of what probably will be a changing of the guard among media giants within a few years. Other top moguls such as Viacom Inc.’s Sumner Redstone and News Corp.’s Rupert Murdoch are well into their 70s.

At Vivendi Universal, Bronfman’s departure is more symbolic than a significant corporate development. Since Vivendi closed its $30-billion deal for Universal, Bronfman has nominally overseen the company’s music and new-media efforts. Bronfman’s announcement that he is leaving came as no surprise to investors, analysts and Universal executives.

“Messier owns the bus. Edgar served at Messier’s pleasure,” said investor Mario Gabelli, a major Vivendi Universal shareholder.

Bronfman plunged into entertainment in 1995 when Seagram spent $5.7 billion for a controlling, 80% interest in what was then MCA Inc. in a deal with Japan’s Matsushita Electric Industrial. At the time, Montreal-based Seagram was best-known for its liquor brands such as Chivas Regal whiskey, as well as being the biggest shareholder in DuPoint, the energy and chemicals giant. Vivendi has a pending deal to sell Seagram’s liquor business to Britain’s Diageo and France’s Pernod Ricard for $8.2 billion in cash.

Under Bronfman, what had been a music also-ran is now the world’s biggest, accounting for 30% of U.S. album sales. He also saw the company’s film studio rebound to the top of the business and eventually negotiated a lucrative sale to Vivendi on behalf of his family.

But he was criticized for selling the company’s valuable television assets to USA Networks Inc. Chairman Barry Diller and failing to add the much-needed cable or network distribution.

He was never accepted by Hollywood’s establishment, who labeled him a dilettante, especially after he co-wrote the title song of the Universal film “Daylight” under the pseudonym Sam Roman and Celine Dion’s hit single “To Love You More” as Junior Miles.

Bronfman also was criticized for a detached, sometimes insensitive management style, firing former Universal Chief Executive Frank Biondi, who had the news broken to him by a Times reporter.

Sidney Sheinberg, former president of Universal Studios predecessor MCA and a longtime critic of the way Bronfman dealt with his former executive team, said it was clear that Bronfman’s role was more of a figurehead at Vivendi Universal. “He’s being treated like he treated us. I wish him no better or worse,” Sheinberg said.

Bronfman said he is unfazed by the critics.

“It doesn’t really matter to me. I can’t judge other people’s comments, or the motives of those comments, be it positive or negative. I always did what I thought is right. I will be judged by my results, and nothing’s changed about that.”

Universal executives strongly defended Bronfman.

“He built an incredible company. He was really integral to the company’s success,” Universal President Ron Meyer said.

Bronfman also revived the nearly dead career of Doug Morris, who now oversees Universal’s giant music operation. Hours after Morris was fired in 1995 as Time Warner’s music chief, Bronfman called, asking whether he’d seen the film “The Shawshank Redemption,” in which a down-and-out ex-convict is reunited with a friend on a beach. After Morris told Bronfman he had, Bronfman replied, “Well, you’re the guy who just got out of prison, and I’m the guy who is waiting for you on the beach.” Bronfman funded a record label for Morris, which he named Rising Tide in Bronfman’s honor. Bronfman later made Morris head of the company’s entire music operation.

“I was out the window, heading to go splat, and he caught me,” Morris said Thursday.

Morris also credits Bronfman with showing courage in acquiring labels Interscope and Def Jam, home to many edgy rap artists. “These were controversial companies that were under attack. He had the courage to back us. He really changed the history of the music industry,” Morris said.

Bronfman’s biggest strategic move came when he orchestrated the 1998 purchase for $10.4 billion of PolyGram Music, which formed the world’s largest music company and made Bronfman at that time arguably the most powerful executive in music.

The PolyGram deal cemented Universal’s position as the industry leader even more firmly than anyone imagined. In addition from delivering huge market share, the merger appeared to awaken antitrust regulators to consolidation in the music business. The two proposed corporate mergers since--Time Warner with EMI Group and then Bertelsmann with EMI--each collapsed amid objections from European regulators.

But if Bronfman created a music juggernaut, he also oversaw some fumbles in the emerging online marketplace. Seagram poured tens of millions of dollars into developing a system to transmit music on the Internet, planning to charge $2 per download. The system failed to attract enough users and this year was folded into Universal’s other online music holdings.

Still, analysts credit Bronfman with finding the right management to revive the movie studio, now overseen by Meyer and headed by studio chief Stacey Snider. Universal has enjoyed a string of box-office successes in the last three years, such as “The Mummy,” “The Fast and the Furious” and “American Pie.”

“Edgar was somewhat maligned,” UBS Warburg analyst Christopher Dixon said. “This is really an unbelievable record. He really did build up an asset base and build a great management team.”

Under Bronfman’s tenure, Universal also underwent an aggressive expansion of its theme park business, opening a second theme park in Orlando called Islands of Adventure in 1999 to compete against industry giant Walt Disney Co.’s Walt Disney World. Seeking to expand its international theme park business, Universal Studios this year opened its first theme park in Japan.

Bronfman said he hasn’t decided about his future plans. He agreed not to sell any of the 3% Vivendi Universal stake held by his father’s side of the family--his uncle, Charles, owns the other 3%--through next year.

Under his four-year employment agreement, Bronfman will receive a payment of three times his base salary of $1 million, plus a bonus of as much as $3 million and the ability to exercise stock options. His agreement granted him options to purchase at least 500,000 Vivendi shares.

Messier said he intends to maintain close relations with Bronfman, who will continue to serve as an advisor to Messier. “There are so many people whose loyalty is to themselves. Edgar’s first loyalty has been to [Vivendi], and I really appreciate that,” Messier said.

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Times staff writer Jeff Leeds contributed to this report.