Bronfman To Sue Vivendi Over Pension

Warner Music chief executive Edgar Bronfman Jr. is suing his former employer Vivendi for allegedly cutting his pension payments by 65 percent.

Bronfman, who resigned from the French telecom and media conglomerate in March 2002, has filed a complaint in a Manhattan district court.

He said that in 2006 Vivendi informed him it had made a mistake in its calculations and had mistakenly credited him for 15 years of "additional service."

The lawsuit states that had Bronfman known before leaving the company that the size of his pension would be reduced, he would have negotiated a higher rate of compensation.

Meanwhile, one of the major shareholders in Warner Music has expressed concern that the U.S. company may overbid for the U.K.’s EMI and said the company isn’t worth the 320p per share that was on offer last year.

In an April 13th article in the U.K.’s Daily Telegraph, Scott Sperling – co-president of investment group Thomas H. Lee Partners – said the British company’s sliding profits and lack of growth should be reflected in any new offer that Warner might make.

"We want to be very realistic about what we would be buying and what we could do with the company, as the base level of profitability and the growth become increasingly problematic," he reportedly told Reuters Hedge Funds and Private Equity Summit in New York.

Referring to last year’s offer, he said, "Clearly, that’s not anywhere near what you’d want to pay today. EMI has announced a series of disappointing results and we don’t see it turning around."

EMI, which issued two profit warnings in as many months at the beginning of the year, reportedly rejected a new 260p per-share cash bid from Warner in March on the grounds that the price was inadequate and not in the best interests of its shareholders.

However, the Thomas H. Lee Partners exec – whose company owns 37.2 percent of Warner Music – told the Reuters summit that Warner is still determined to make a merger work, despite having failed to do so after six years of trying.

Despite regulatory uncertainties and the years of disagreement, Sperling said he believed a merger between Warner and EMI still made sense.

"If you look at the ability to scale a combination of Warner and EMI so that it’s roughly equivalent to Sony-BMG, what you would have is a company that’s able to eliminate some of the duplicative parts, particularly on the physical side’s cost structure and that’s highly accretive to the shareholders of both companies."

Some analysts have suggested EMI’s dramatic decision this month to make its catalog available in digital form without a key piracy measure has added pressure on Warner to make its next move more swiftly.

Warner doesn’t support the idea of selling music free of digital rights management software protection. Many U.K. business writers have suggested that foiling a new Warner bid is one of the reasons EMI chose to go that route.