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Universal CEO ousted
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November 16, 1998: 5:45 p.m. ET
Frank Biondi resigns amid Seagram shake-up, box office disappointments
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NEW YORK (CNNfn) Frank Biondi, the embattled chairman and chief executive of Universal Studios, resigned Monday, the apparent casualty of a series of box office disappointments and a corporate shake-up by the studio's parent, the Seagram Co.
Biondi, who was just two years into a five-year contract with Universal, stepped down after Seagram's president and CEO, Edgar Bronfman Jr. reportedly flew to Los Angeles from New York Sunday evening to seek his resignation.
The apparent ouster is reminiscent of Biondi's unhappy ending with Viacom, the New York entertainment company where he served at president and chief executive officer for nearly a decade until being forced out in January 1996.
Viacom's Chairman Sumner Redstone, renowned as one of the industry's toughest bosses, later attempted unsuccessfully to block Biondi from joining Seagram's, a Viacom competitor.
Seagram's CEO Bronfman pursued Biondi so aggressively, however, that Redstone finally agreed to release Biondi from the non-compete clause in his contract.
Analysts say the corporate shake-up at Seagram comes as no surprise, and at least one says Biondi will likely retain his reputation as a respected industry executive, despite his tarnished track record.
"This move is not shocking given the studio's lackluster performance," Salomon Smith Barney analyst Jill Krutick wrote in a just-released report. "Mr. Biondi's apparent diminished role when Barry Diller was brought into the fold with [Seagram's] purchase of a stake in USA Networks and a reduced role as [PolyGram] is woven into the [Seagram] mix."
Even so, Biondi "is well-regarded by Wall Street and this move clearly underscores more transition ahead as Seagram solidifies its business mix."
What's next for Universal
Biondi will be replaced by Universal's current president and chief operating officer, Ron Meyer, who will report directly to Bronfman.
Under a new arrangement, Meyer will oversee three of Universal's core entertainment businesses: Universal Pictures, Universal Television and Networks Group, and Universal Studios Recreation Group.
Other operating division chiefs who will report directly to Bronfman come from the Seagram Spirits and Wine Group, The Seagram Chateau & Estate Wines Co. and The Seagram Beverage Co.
The reorganization is seen as an effort by Bronfman to consolidate control of the company's diffuse operations by keeping closer tabs on the activities of each division.
"Our decision to acquire PolyGram N.V., coupled with our on-going commitment to maximize shareholder value, led us to critically examine Universal's existing structure and operations," Bronfman said in a statement.
Bronfman added the moves would help Seagram become "a more competitive and aggressive" company.
Porter Bibb, media analyst with Ladenburg Thalmann, said it was widely presumed from the get-go that Biondi was merely a hired gun, brought on to lend credibility to a young, inexperienced Bronfman.
In the control seat is "where Edgar Jr. wanted to be the day he closed the deal with MCA, but he didn't have the credentials, the family support or the Wall Street support that he needed," Bibb said. "It was a foregone conclusion that Edgar Jr. wanted to run the company himself …"
Now that Bronfman has essentially cut his teeth and proven to Wall Street he can be taken seriously, Bibb said Biondi was no longer necessary in the management mix.
"Biondi filled in for [Bronfman] and gave the company serious credibility," he said.
Biondi was likely well-aware of his role in the company, but Bibb said a $76 million contract was a compelling reason to join the company.
Citing inside sources, the New York Times reported Monday that Bronfman is angry at the poor performance of the film division and also may oust the top film executive, Casey Silver.
Seagram's spokesman Ray Boyce, however, said Silver's job is secure.
"There is no change in his status at all," he said. "That was not part of the announcement."
Bronfman's mood probably didn't improve this weekend, however, with the dismal reviews and lackluster ticket sales of "Meet Joe Black," a three-hour film made by Universal Studios.
The romantic drama, starring Brad Pitt and directed by Martin Brest, cost at least $90 million. Another $30 million was spent in promotions. The movie came in third at the box office over the weekend, earning about $15.6 million, well below "The Waterboy" and "I Still Know What You Did Last Summer."
Universal also is preparing to release its newest movie, "Babe, Pig in the City," for the Thanksgiving weekend. But its Los Angeles premiere, originally scheduled for Monday, was canceled because the movie isn't yet finished.
The shake-up at Universal Studios is designed to give Bronfman a more hands-on role with Seagram's entertainment operations.
But Biondi's departure would deprive Seagram of an industry veteran at a time when the company is bringing PolyGram into its fold. The $10.4 billion buyout of the music company is expected to close in December.
Biondi, 53, who built his mostly television career at Home Box Office and Viacom, has declined to comment.
The chairman and chief executive of Seagram's Universal Studios Inc. has more than two years left on his five-year contract worth as much as $76 million.
Shares of Seagram (VO) were down 1/4 to 34-1/16 Monday on the New York Stock Exchange. The company's shares have dropped from around $45 in May, partly because of Seagram's underperforming liquor business in Asia, but also over concerns about Universal Studios
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