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Growth on tap for Seagram
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March 31, 1998: 5:01 p.m. ET
CEO Bronfman, leading a makeover, forecasts 20 pct growth in media biz
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NEW YORK (CNNfn) - Three years after Seagram Co. Ltd. gulped down Universal Inc.'s vast entertainment empire, the Canadian beverage giant is looking forward to a smooth period of growth.
"I think we have some strong growth ahead of us" - and about 20 percent in its entertainment divisions over the next few years, Seagram President and Chief Executive Officer Edgar Bronfman Jr. told CNNfn Tuesday at "The Big Picture" media conference here.
"I think 'the Street' just needs to see some results - and we expect to deliver them," said Bronfman.
In 1995 Seagram stunned shareholders by selling a substantial chunk of its E.I. du Pont de Nemours & Co. shares to finance the purchase of Universal. At the time, many critics questioned the $5.7 billion deal because Seagram did not have experience operating a major Hollywood studio.
However, in recent months the company has started to show signs of strengthening its entertainment business by acquiring the USA Networks and signing a complex $4 billion deal with HSN Inc, parent of the Home Shopping Network.
The HSN deal brought in programming whiz Barry Diller to head HSN under a new name - USA Networks Inc.
Universal agreed only to seek a 45 percent stake in HSN over the next four years, but the company appears to be leaving open its option to buy more later.
Just as Wall Street began to applaud that move, "then we got hit on our beverage side by the Asian flu," Bronfman said, adding that a turnaround may be imminent. (138K WAV) or (138K AIFF).
Intermittent speculation has been Seagram might be looking to gobble up a broadcast TV network, such as CBS Corp. But Bronfman said a deal for CBS is out of the picture -- at least for now.
"We looked at it briefly … and if you look at what's been happening to the prices for shows like 'E/R' or football, it seems to me difficult to see how the television broadcast networks are going to make a lot of money," Bronfman said. "So we have no expectations that we will be buying something like that."
Montreal-based Seagram, which reported more than $12.5 billion in sales last year, has a wide product line including entertainment assets such as Universal Pictures and theme parks, Geffen Music, Tropicana orange juice, and Chivas Regal Scotch.
Porter Bibb, a media analyst with Ladenburg, Thalmann, said eventually Seagram may need to spin off either its media or its beverage lines to concentrate on a single business.
However, Bronfman ruled that out.
"We really don't see that eventuality, we love the free cash flow from the spirits business, we need it to continue to grow our entertainment assets," Bronfman said.
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Seagram
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