SEAGRAM TO USE EXPERIENCE TO ACCELERATE MCA'S GROWTH

JOHN KAROLEFSKI

LAS VEGAS -- Seagram Co. said it will use the brand and trade marketing experience gained in its beverage businesses to propel recently acquired MCA to greater success.

"This is a business of globalization, and we will use all the resources of Seagram and MCA to rapidly expand our international presence. This is a business of customers as well as consumers, and we will become progressively closer to them both. This is a business of brands, and we will use them aggressively," said Edgar Bronfman Jr., president and chief executive officer of Seagram Co., Montreal. He delivered the keynote address here at NATPE '96, the annual convention of the National Association of Television Program Executives. He outlined an ambitious plan to revitalize MCA in the coming years.

Seagram acquired MCA nine months ago. MCA makes motion pictures, television and home video products, publishes books, produces recorded music and operates theme parks. Seagram, a long-time leader in the spirits business, had acquired Tropicana Products in 1988.

"The way you make Scotch whiskey or orange juice doesn't have much in common with the way you make television programs or build theme parks; that much is clear," said Bronfman. "But we do know something about the fundamental determinants of future success in both the beverage and entertainment businesses.

"The future of entertainment is increasingly global, and we have first-hand experience at building businesses in every corner of the globe. The future of entertainment is increasingly consumer focused, and

we have learned a great deal about marketing to today's consumers and their discretionary spending budgets."

According to Bronfman, last month some of the MCA management team was introduced to the Seagram style of change management, or re-engineering. "Changing the way MCA is managed means becoming performance based, as a culture and as a company," he said. "It means detailed understanding of what we actually do -- and what our competitors do better. It means eliminating complexity. It means adding speed and flexibility. It means accuracy. It means encouraging entrepreneurship, and building teamwork. It means emphasizing responsiveness as a cardinal virtue."

Bronfman stressed being responsive to both the consumer and the customer.

"Although there are obvious exceptions, the companies that create entertainment product do not generally sell that product directly to the consumer," he said. "Their customers are theater chains, broadcasters, video stores, record stores, booksellers, mass merchandisers, catalog sellers, and the like. These customers are central to our business success."

Bronfman asked the question, Will MCA follow the other major entertainment companies into a greater presence in distribution? He acknowledged advantages and disadvantages. He also gave two relevant thoughts. "First, one reason for Seagram's success in the spirits business is that we took greater control of our distribution than did our competitors, and we did it faster. But -- and this is a big but -- we did so in a great variety of ways: partnerships, alliances and joint ventures, as well as acquisitions and start-ups. "[Second], from the perspective of managing change, it does not matter whether we distribute through an internal division, an affiliate, a partner, or an independent customer, or all of them. "In every case, we must get closer to our customers, more responsive to their needs," he said. If we don't, we and they will fall short in the consumer marketplace, no matter what the corporate ownership structure is."

Bronfman said global expansion is an area that will receive considerable attention. Seagram's experience will be leveraged to help MCA build business in the markets where it should expand. "You will see more of this kind of interdivisional cooperation," he said. "I do not want to make too much of the idea of synergies between beverages and entertainment as businesses themselves, but there are clearly areas where the skills of one can be helpful to the other, and we will take advantage of those opportunities," he said. Bronfman said that Seagram will also take advantage of the brands that MCA develops.

"Few brands implant themselves in the public consciousness faster than those generated by the major entertainment companies," he said.