Bronfman Goes To The Front Line

As Warner Music Group faces spiraling losses, a push to go private and a $100 million lawsuit filed against CEO Edgar Bronfman Jr., the company is looking at another way to boost its bottom dollar: an increased investment in Front Line Management.

There is little doubt that, as returns dwindle, record companies will try to increase their influence in touring. But unlike some other record companies, WMG appears to be racing into the red and could use a safe place to keep its money. It made $179 million during the fiscal third quarter of 2005, $14 million in the 3Q of 2006, and $17 million this time around.

It has increased its share of interest in Front Line to a reported $110 million. IAC / InterActiveCorp, parent company of Ticketmaster, is still majority owner of Front Line. It agreed to sell a portion of its investment to WMG at the same per-share price it paid to acquire its holdings.

Exactly what WMG is considering doing with this investment is uncertain, other than shifting funds into a better stock.

Another WMG investment: Bulldog Entertainment, according to Fox News gossip columnist Roger Friedman. Bulldog Entertainment is the promoter of the luxury concerts in the Hamptons, where $15,000 will get a fan a season ticket to intimate concerts by Billy Joel, Dave Matthews and Tom Petty & The Heartbreakers, among others. Although some reports have said the concerts are not selling so well, Joel’s agent told Pollstar that the Piano Man’s concert was packed and highly professional.

Maybe these new investments in live music are a smooth move for Bronfman, who’s had a bad run of things. He joined his family’s business at Seagrams after an early life attempt to be a songwriter. In more recent times, he bought MCA but he – and his family – lost billions when Vivendi chief Jean-Marie Messier reportedly froze Bronfman out of a partnership and subsequently drove the company into the ground.

"Even after the successful purchase of Warner Music in 2003, he has never quite shaken the reputation of being someone born on third base who never made it home," Conde Nast Portfolio said in a lengthy and thoroughly interesting article about Bronfman’s latest lawsuit.

According to the article, Bronfman’s critics say the only reason anyone still listens to him is because he has billions more to burn.

"When he bought PolyGram, he spent tens of millions hiring the Boston Consulting Group," a former employee told the mag. "It was funny: In meetings, everyone would look at him, and he’d say stuff like, ‘We’re not a record company. We’re a music company.’ And all the consultants would sit there and nod in agreement."

Bronfman is being sued by the once-powerful Dick Snyder, who turned Simon & Schuster into a multibillion publishing company and has the reputation of being a shark’s shark. Snyder is suing for $100 million, claiming he and Bronfman shook hands in Anguilla around New Year’s 2002, with Snyder understanding that he would help Bronfman build a new multibillion-dollar business, according to Portfolio.

Snyder, who allegedly would fire underlings if they had the audacity to take an elevator ride with him, lost much of his clout after new S&S owner Sumner Redstone fired him in 1994. Snyder attempted to create a powerhouse out of Golden Books but failed and in the process lost a friendship with Barry Diller.

And that’s why Bronfman’s camp denies Snyder’s influence in landing the Warner deal. Bronfman gave Snyder a room in Bronfman’s office suite to help him feel relevant again and Snyder even bought his own computer. When Bronfman moved his offices, Snyder came to work to find the place empty.

"Edgar knew that Dick Snyder was at loose ends and needed a place to hang his hat," Bronfman attorney Orin Snyder told the mag. "He generously offered him an office in his suite – no more, no less."