Bronfman Stirs Universal

By KIM MASTERS/LOS ANGELES

At 42, Edgar Bronfman Jr. is certainly the youngest and handsomest of the moguls who own entertainment companies. And ever since he acquired MCA in 1995, Hollywood has been waiting to see whether he would also prove to be one of the smartest. But in the wake of a spate of firings at the company, now called Universal Studios, there is a giant whirring sound as Tinseltown starts to turn on young Bronfman.

And the skepticism doesn't end in Los Angeles. The New York Times, Wall Street Journal and USA Today have all put Bronfman's performance under the critical microscope. Contrarian weekly Barron's, however, sees his actions as a harbinger of good things to come. Earlier this month, the Toronto Stock Exchange halted trading of his parent company, Seagram, to allow officials to deny a whirl of rumors: that Seagram was shedding its Tropicana juice division; that Bronfman might sell Universal to DreamWorks; and, last and most incredible, that patriarch Edgar Bronfman Sr. was essentially firing his own son.

That may sound strange, but father and son have not spoken with one voice of late. Last month, while Junior was denying that his father was distressed over his decision to sell the company's 25% stake in DuPont in order to buy into Hollywood, Senior suggested in an interview with W magazine that trading nylon for celluloid was a terrible idea. His chagrin is understandable: the DuPont stock, worth $8.8 billion when Seagram sold it in 1995 to pay for its $5.7 billion purchase of Universal, has soared about $9 billion in value. Seagram's stock lags the market, in part because of doubts about Universal, which last year had operating income of $242 million on sales of about $5.6 billion. "So far, it looks like we missed the boat," Edgar Sr. said, quickly adding, "I supported my son then, and I support him now."

Junior has been busy running the executive catapult. First out: executive vice president Howard Weitzman, helped by his close friend president Ron Meyer. On the studio level, production president Marc Platt was dismissed (on his birthday), and the marketing team of Buffy Shutt and Kathy Jones resigned under pressure.

Weitzman, a lawyer who represented John DeLorean and, briefly, O.J. Simpson, was an odd hire, considering his absolute lack of corporate experience. Weitzman says he left because the job became too administrative. "Steering a glacier," he says, "is not easy." Platt was ousted because he clashed with studio chairman Casey Silver. It was Silver, not Platt, who approved a slew of underperforming films, such as the Bruce Willis-Richard Gere vehicle The Jackal and the political dud Primary Colors. Silver, whose contract has been renewed, says he can turn the studio around: "We have excellent product in the pipeline. I couldn't be more confident."

Shutt and Jones are popular with directors like Steven Spielberg and Ron Howard. But they may have resisted, fatally, a cost-cutting re-engineering scheme. And Bronfman thought they were too quick to write off movies that did not have hit potential.

Bronfman is frustrated by the skepticism that greets his assurances that the dismissals are finished, but then lots of things about Universal must frustrate him. A former Universal insider says Michael Ovitz, onetime head of the powerful CAA talent agency who played a bit part in negotiating Bronfman's purchase of Universal, portrayed the company as "an easy turnaround." Ovitz also figured, wrongly, that he would be the one to do it. But instead of buying a slumbering giant, Bronfman bought a more troublesome enterprise.

Bronfman may have created some problems by hiring his top executive team backward. When talks with Ovitz fell through, he hired Ovitz's partner, Meyer, as No. 2 man. Meyer installed his associate Sandy Climan and his friend Weitzman in top executive jobs. Both are now gone. And finally, with the key players already in place, Bronfman hired Frank Biondi as chairman of the company.

Then, last October, Bronfman announced that he was essentially selling Universal's television and cable operations to his friend and mentor, Barry Diller. Since those were supposed to be Biondi's strengths, the move was widely regarded as emasculating Biondi. Bronfman has pointed out that Seagram's 45% stake in Diller's firm has soared more than $1 billion in value. Biondi soldiers on, noting that Universal's profits are on a par with the industry. He adds, "And we expect continued strong growth in profitability--on the order of 20% a year--for the next two years."

Bronfman says the company (and presumably his image) has turned the corner. The music division, led by bands such as No Doubt and the Wallflowers, is performing well, and Universal is exploring the purchase of EMI, the British music label. His investment in another media company, Time Warner (TIME's parent company), has paid off. In February, Bronfman sold 15 million Time Warner shares for $64.38 each, or about $965 million, nearly double what he paid for them. Universal expects to open new theme parks in Florida and Japan in the next few years. When it comes to movies, however, even studio insiders concede that it will be a long, not particularly hot summer. Universal isn't really counting on any hits until Christmas.

Some industry veterans figure Bronfman isn't done reshuffling yet. Speculation lingers about a sale to DreamWorks, though DreamWorks partner David Geffen says, "That's a made-up story." Some expect Diller, still assembling his new USA Networks Inc., to play a larger role, but Diller denies that, saying "I have enough to do." He says he doesn't even discuss Universal's business with Bronfman. As for the harsh reviews that Bronfman's recent performance has received, Diller dismisses them. "Hollywood turns on everybody and then turns back," he says. "Such is the nature of the process." In other words, Edgar needs to wait for the sequel.