Word: vivendi
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...interference of politics was completely wrong," said Michael Rogowski, president of the Federal Association of German Industry. At least Sommer has the consolation that he is not alone among embattled European CEOs. Only three weeks ago, Jean-Marie Messier was removed as chief executive of French media giant Vivendi, where a string of acquisitions had left the company with a pile of debt and a slumping share price. France Télécom chairman Michel Bon is also under pressure because of high debts. In the past, Europe's clubby business atmosphere meant a consensus approach to decision making...
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...
There was no shortage of irony as Bronfman helped wrest Vivendi away from chief executive Jean-Marie Messier. After all, like Messier, Bronfman always came across as a bit of a dilettante and star-struck CEO. At Universal he once sent a memo to studio executives saying he expected to have double-digit earnings growth every quarter, a virtual impossibility in such a hit-driven industry...
...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...
Still, Bronfman's bottom-line record is such that even if he wanted to take back control of Vivendi's American entertainment assets, as some have speculated, major shareholders would probably oppose it. Edgar has other things to keep him busy, anyway. He has taken a 40% stake in British jeweler Asprey & Garrard, hoping to expand the luxury-goods brand to shoes and other fashion accessories. His family members must surely hope they will still be able to afford to dress that...