Talks between Seagram and the Saudi prince, Muhammad bin Bandar bin Abdul Aziz, who wanted to buy PolyGram Filmed Entertainment collapsed last week after Seagram learned that French pay TV giant Canal Plus was a silent partner in the bid.
Former Columbia TriStar president Fred Bernstein and former Columbia Pictures president Dan Melnick pulled out of the deal after discovering that they had been misled about negotiations between the prince and Canal Plus.
Canal Plus was known to be interested in acquiring overseas distribution rights to PFE films and the studio's overseas distribution operations.
Trade Mag Variety has reported that Gilbert Federbush, who was the princes representative in the deal, had secretly negotiated a side-deal with Canal Plus giving the Canal Plus European distribution rights to PFE's output and Canal Plus arranged to meet a Seagram request on behalf of the prince for a $500 million transfer of cash to the U.S. as proof of required capital to complete the sale. The involvement of Fenderbush, who is reported to have a shady past with a conviction for fraud and a reputation for stripping companies coupled with the fact that Canal Plus, which had been seeking to partner with another company on a bid, had gone very quiet sent alarm bells ringing.
The prince's offer was reported to be between $400 m and $500 m, which includes the taking over of some $300 m in debt.
Two weeks ago Universal Pictures president, Chris McGurk, put his case forward for keeping PolyGram within Universal Studios. He and top PFE executives suggested that Seagram merge PFE's assets into Universal. On Wednesday this option was exercised and Seagram's announced the formal integration of PolyGram Filmed Entertainment's international operations into Universal. PFE president Stewart Till is to run the international operations, reporting to Universal Pictures president and chief operating officer, Chris McGurk.
The new international arm will release PFE's slate of upcoming pics, which include 'Notting Hill' starring Hugh Grant and Julia Roberts, Frank Darabont's 'The Green Mile' starring Tom Hanks and 'Being John Malkovich' with John Cusack and Cameron Diaz. PFE distributes directly in nine territories and sells the rest of the world via its London-based sales outfit Polygram Film Intl.
The integration would call for Universal to absorb PFE's international distribution assets as well as production labels including Working Title, Alan Parker's Dirty Hands Prods., Michael Winterbottom's Revolution Films and Duncan Kenworthy and Andrew Macdonald's DNA Films.
The company has given little indication as to the future of PFE's U.S. businesses which include U.S. distribution operation PolyGram Films, production label Interscope Communications and video operation PolyGram Video U.S.
Michael McMahon 11/2/99
