Seagram Beats Expectations With $21-Million Profit
NEW YORK — Entertainment and spirits giant Seagram Co. on Wednesday posted a first-quarter operating profit versus a year-ago loss, beating Wall Street expectations, helped by box-office successes such as “Gladiator†and the sequel to “The Nutty Professor.â€
Seagram also cited strong DVD and home-video sales of “Erin Brockovich†in its film division and hit albums from Italian singer Andrea Bocelli, rapper Eminem and rocker Bon Jovi in its music division.
Seagram, which has agreed to be acquired in a $24-billion deal with French utilities and media group Vivendi, said profits were $21 million, or 5 cents a share, before accounting charges, compared with a loss of $95 million, or 22 cents a share, in the same period last year.
Analysts on average expected the Montreal-based company to earn 3 cents a share, according to First Call/Thomson Financial. Including charges, the company reported a fiscal first-quarter loss of $369 million, or 84 cents a share, compared with a loss of $124 million, or 29 cents a share, in its fiscal first quarter of 1999.
Seagram shares added 50 cents to close at $57.63 on the New York Stock Exchange. Analysts said investors welcomed the first-quarter figures because there were no hidden surprises that could affect the Vivendi deal.
“The transaction with Vivendi is at the foremost consideration in investors’ minds,†said David Leibowitz, analyst at Burnham Securities. “Every pronouncement from the company is put under the microscope.â€
Seagram, which owns the world’s biggest music group and Universal Studios, said revenues fell 3% to $3.54 billion from $3.64 billion in the same period last year.
Seagram’s deal with Vivendi would create Vivendi Universal with Vivendi and its cable TV unit Canal Plus, to form one of the world’s largest media and entertainment companies.
The deal, which has been cleared by U.S., Canadian and European Union regulators, joins Seagram’s entertainment units with the expansive Internet and telecommunications infrastructure being developed by Vivendi. Seagram plans to sell off its $7-billion drinks business.
Seagram officials said they hoped the Vivendi deal would close by year-end.
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