Edgar Bronfman, CEO of the Warner Music Group, didn’t get the kindest treatment from his hometown Toronto Star this weekend. But then again, looking at his track record as presented by the paper, said treatment probably wasn’t unwarranted.
Bronfman’s decision to hand out raises to himself and Lyor Cohen has been covered here previously, but when you see numbers like “$2.6 billion in debt”, you have to wonder how many giant building-covering posters of Madonna Warner can really afford.
Then there are Warner’s own blunders. These include writing off $18-million on a bizarre investment in Bulldog Entertainment Group, an outfit that staged intimate concerts in the Hamptons on Long Island starring the likes of Billy Joel with absurd $3,000 admission prices. Critics feasted on determining just how much Edgar Bronfman Jr. was willing to pay to hobnob with Tom Petty, James Taylor and Prince at the scarcely attended events.
A little more mind-boggling was the $73 million Warner spent to buy Roadrunner Records simply to acquire artist Nickelback. Warner neglected to read the fine print under which Nickelback could ankle after just one more CD for the label. Warner was obliged to kick in additional “elephant bucks,” as one music blog put it, to avoid that embarrassment.
Even ring tone sales are slipping. As long as the traditional industry’s survival depends on selling enough $1 downloads to compensate for the slow death of the $20 CD market, this is a business model the angel Gabriel couldn’t save.
What irks most investors is that Bronfman could have seen the fading treble clef on the wall and sold to EMI at $31 a share, almost four times what Warner stock now fetches.
But having been burned in a cash-and-stock deal with Vivendi, Bronfman and his board were wary of what they regarded as funny money in EMI’s offer. And, fair enough, EMI has since hit the skids.
But a more prescient Bronfman, grasping the dismal prospects for the industry, would have pushed EMI for an all-cash deal.
None of this is new (although putting all of the information together in one place is like a 101 course in incompetence), but you have to wonder why the Star would print this story now, especially considering that most of the information relayed isn’t terribly new. Even with Bob Lefsetz on Warner’s PR beat, is the ship ready to sink?
Sour Notes For Bronfman Jr [Toronto Star]