Word: seagram
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...economies and stiff competition from other spirits. Although recurrent predictions that Scotch would be washed away by a tidal wave of vodka and other trendy tipples have clearly proved premature, the threat remains. Can whisky fight back? It seems to be limbering up. Last year's partition of the Seagram drinks empire by Britain's Diageo and Pernod Ricard of France means that the big three - Diageo and Pernod Ricard, plus Allied Domecq - now account for 57% of global sales. Although global super brands like Diageo's J&B (the world's top-selling Scotch), Allied Domecq's Ballantine...
...some point were supposed to connect seamlessly and gush money. But he was late to the Big Media theory. Firms like Disney, AOL Time Warner, News Corp. and Viacom had already spent billions connecting content with distribution. To catch up, Messier became a serial acquirer, buying the Bronfmans' Seagram Co. and its Universal movie studio, theme parks and music group for $34 billion in stock. Last year, in the U.S. alone, he agreed to buy book publisher Houghton Mifflin, music website mp3.com a 10% stake in the EchoStar satellite service, and the entertainment assets of Barry Diller's USA Networks...
Well, not the whole thing, at least. Since Bronfman took the helm from his father Edgar Sr. in 1994 and uncorked a new, media-centric strategy, the family's holdings in Seagram, and now Vivendi, have lost 75% of their value and are currently around $1 billion. Seeking high-growth businesses, Bronfman ultimately jettisoned the famous spirits business, an unpopular move with part of the family. "From the beginning of this escapade, [Bronfman's uncle] Charles has been dead set against [it]," says a Bronfman-family insider. And to finance his $5.7 billion purchase of movie studio MCA/Universal...
...Bronfman did understand certain things. At Seagram he got rid of second-tier brands and inked a lucrative distribution deal with Absolut vodka. More important, he recognized that Seagram's reliance on the slowing liquor business wasn't healthy. He made some shrewd deals, generating a profit of almost 50% on his family's $2.2 billion investment in Time Warner and getting Vivendi to pay a 50% premium for Seagram's shares (alas, he took it in Vivendi stock). And he wisely sold millions of those Vivendi shares, taking about $1 billion off the table...
...packed address book and the balls of a drunken woman, Messier passed himself off as a shrewd industrialist when he was in fact at very best a cold-blooded financier (a redundancy of terms, I know). • That the Bronfman family is a cunning brood, who in selling Seagram to Messier managed the equivalent of selling a Mercedes for $100,000 and, if all goes well, buying it back two years later for $20,000. An $80,000 profit, and they still have the car - all tuned up, to boot. Bravo, wise guys. • That I should not admire wise...