|Edgard Bronfman, jr.|
A French court, in a surprise ruling, on Friday convicted and fined Warner Music Group chairman and CEO Edgar Bronfman Jr. for insider trading and former high-flying Vivendi CEO Jean-Marie Messier for misusing company funds and misleading investors.
Bronfman, a former executive vice president of Vivendi Universal, was fined €5 million ($6.7 million) and given a 15-month suspended sentence for insider trading around the Vivendi media conglomerate when he was a top executive there. Messier was handed a three-year suspended prison sentence and a €150,000 fine.
The unexpected convictions came despite the prosecutor's recommendations that the two men and other ex-Vivendi executives be cleared of all charges for lack of evidence that they duped investors.
Both said they would appeal the verdict, which deals a blow to the two men once considered masterminds of massive mergers in the media and telecommunications sectors.But though the piece explicitly says it was a “surprise ruling”, that doesn’t seem to be the case—especially if one knows how to read the tea leaves.
Just the day before the ruling, the New York Times Dealbook Blog, edited by Andrew Ross Sorkin—the most plugged-in and establishment-oriented business journalist in Manhattan—ran a piece called “Warner Music Plan: Buy or Be Bought”:
Warner Music Group, one of the four major record companies, has hired the investment bank Goldman Sachs to seek out potential buyers for the company, a process that will play out while Warner continues to explore buying the beleaguered British music giant EMI.
The decision to hire Goldman Sachs came after several suitors, including the buyout firm Kohlberg Kravis Roberts, approached Warner Music’s management in recent months about buying the company, according to an executive briefed on the matter who spoke only anonymously.
Instead of negotiating solely with K.K.R., the company’s management decided to begin a formal sale process by hiring Goldman, which has recently begun making pitches to financial investors and media companies about buying Warner.This came out the day before the ruling.
Obviously, Sorkin was played by Bronfman, who likely leaked him this non-news item (“KKR approached Warner Music’s management in recent months”? Please.) That Bronfman/Warner Music hired Goldman to explore a sale or a buy? The timing so close to the decision could not be happenstance: Bronfman likely hired GS just to stir up the media waters, and deflect from the conviction.
So it couldn’t have been such a surprise.
Digging through the trash heap that is Edgar Bronfman’s business saga (sold out 25% share in DuPont for $9 billion, went into the media biz, wound up with a record company, whittling those $9 billion to likely around $1.5 billion—if not less), The Hourly G came across this very interesting piece by David Plotz in Slate, from way back in 1998.
Plotz’s piece details the misplaced reputations of both Bronfman Junior and Bronfman Senior. Worth reading in its entirety, here’s the relevant graphs:
A certain aura of creeping decay does surround the Bronfmans, and it is tempting to view them as a study in dynastic decline. [ . . . ]
But the saga of dynastic decline is not quite so simple. The father [Edgar Sr.] is not quite the icon he seems, and the son is not quite the flake. Edgar Jr. is mocked for his playboy instincts, but it's Edgar Sr. who has been married five times to four different women. Edgar Jr. is the Hollywood mogul, but it's Edgar Sr. who is bullying and grandiose. Edgar Jr. is soft-spoken and self-effacing. Edgar Sr. deplores the assimilation of Jews as a "silent Holocaust," but he barely observes the Jewish religion, married three non-Jews, and named his son after himself, a major Jewish no-no. Edgar Jr. is pilloried for dragging a liquor company into the film industry, but Edgar Sr. did it first. He tried to take over a movie studio in the late '60s and even ran MGM briefly.What’s the line from the Bible? “The sins of the father unto the son”? Guess the sin that runs in this family is hypocrisy and incompetence.
Hypocrisy is forgiveable—incompetence is not.