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MCA, Seagram and Universal Group

Overview

This profile covers MCA, Seagram and Universal.


This page covers -

  • introduction
  • trajectory
  • the studio
  • MCA
  • Matsushita
  • Seagram and the Bronfmans
  • studies

There are complementary profiles on Vivendi (which acquired Seagram) and Polygram, a major component of Universal's music arm.

Introduction

Universal's history is interesting because it brings together Japanese electronic manufacturing, US East Coast investment in Hollywood film production, a Canadian cinema chain, the Bronfman family, the Polygram record and music publishing giant and talent agency turned media group MCA.

Trajectory

Universal Pictures was founded by Carl Laemmle (1867-1939) in 1912 as the Universal Film Manufacturing Company of New York. He'd opened a nickelodeon theater in Chicago during 1906 after migrating from Bavaria, subsequently building a nickelodeon chain and expanding into distribution.

During 1909, with support from several minor studios opposed to the Edison monopoly, he established the Independent Moving Picture Company of America (IMP). In 1911 IMP bought the Nestor Studio on the West Coast and five years later founded Universal Studios in Hollywood as the centre of a large-scale integrated production, distribution and exhibition operation.

As with most of the Hollywood studios, although Carl Sr was able to pass operational control to son Carl Laemmle Jr (1908-1979) in 1929, Universal was funded by 'East Coast money'. Investors ousted the younger Laemmle during the Depression, despite the success of classics such as James Whale's Frankenstein, with the group being sold to the Standard Capital Company.

For the following two decades Universal had a profile as a competent but not especially profitable factory for B grade and C grade films, such as Abbott and Costello comedies and the Deanna Durbin musicals. In 1946 it merged with International Pictures (as Universal-International) under the creative control of William Goetz and Leo Spitz.

Universal International was acquired by the Decca record company in 1952 as part of ownership changes following the 1949 ruling by the US Department of Justice about spin-off of exhibition operations. Five years later MCA acquired Paramount's pre-1948 film library for US$50 million, subsequently proven to be a bargain as the new owners licenced films to US and overseas television stations. MCA bought Universal's back lot for US$11 million in 1958.

Four years later, amid increased competition and consolidation in the record industry, Decca sold Universal to MCA. The sale reflected MCA's interest in using Universal's production and distribution facilities, particularly for television production as an extension of its existing Revue Television Productions operation (responsible for video fodder such as Alfred Hitchcock Presents, Leave It to Beaver and Wagon Train. As Universal Television it established a profile for law & order dramas (Dragnet, Columbo and Law & Order) and action series. Feature film involvement included Jaws and ET.

In 1990 MCA was acquired US$1.6 billion by Japan's Matsushita group, a counterpart of GE and Westinghouse (and a competitor of Sony). Matsushita - centred on Matsushita Electric Industrial Company - was best known as the parent of Panasonic electronics.

Acquisition reflected Matsushita's large cash flow (particularly from exporting consumer appliances to North America), the availability of cheap loans as a consequence of the 1980s Japanese property bubble and received wisdom that hardware manufacturers such as Sony and Matsushita had to expand downstream into content production.

Performance by MCA was underwhelming and Matsushita appears to have faced difficulties coming to grips with the 'creatives' in Los Angeles. In 1995 it accordingly offloaded a controlling stake MCA to Seagram for US$5.7 billion.

As a way of gaining cash for Seagram's ambitious expansion plans (eg acquisition of Polygram for US$10.4 billion) and building alliances the Universal Television studios were spun off to Seagram's USA Networks subsidiary in 1998, being renamed Studios USA. Vivendi inherited Universal in 2000 when it acquired Seagram, reflecting that purchase by rebadging itself as Vivendi Universal. Two years later it bought back the USA Networks studio and cable television holdings (reinstating the Universal Television name).

In 2003, as part of the corporate restructuring noted above, Vivendi Universal spun off Universal's US studios, distribution, theme parks and cable television operations to a joint venture with GE-controlled NBC. That new vehicle - in which Vivendi retained a 20% stake - was called NBC Universal.

A chronology is here.

The studio

A history of the Universal Pictures, Studios USA and Review appears on the following page of the profile.

MCA

[under development]

Matsushita

[under development]

Seagram and the Bronfmans

[under development]

Studies

We have pointed to studies of Universal on the following page of this profile.

There has been no major English-language study of Konosuke Matsushita or his group. Context is provided by Alfred Chandler's Inventing the Electronic Century: The Epic Story of the Consumer Electronics and Computer Science Industries (New York: Free Press 2001). There is more detailed coverage in Bob Johnstone's We Were Burning: Japanese Entrepreneurs & The Forging of the Electronic Age (New York: Basic Books 1999) and Simon Partner's Assembled In Japan: Electrical Goods & The Making Of The Japanese Consumer (Berkeley: Uni of California Press 1999). Toshihiko Yamashita's The Panasonic Way (New York: Kodansha 1989) is an account by the group's former CEO.

Good Spirits: The Making of A Businessman (New York: Putnam 1998) is a memoir by Seagram boss Edgar Bronfman Jr, following up his The Making of A Jew (New York: Putnam 1996). He was profiled in Ken Auletta's The Highwaymen - Warriors of the Information Superhighway (New York: Random House 1997) and in The Icarus Factor: The Rise and Fall of Edgar Bronfman Jr (Toronto: Doubleday Canada 2004) by Rod McQueen.

The family has been controversial, with for example allegations that Seagram's growth was driven by rum-running across the Canadian border during Prohibition and unfavourable media coverage of Edper Brascan, the property and resources conglomerate established by Edgar Bronfman's cousins after a nastily public feud between what are often tagged the 'Edgar' (or Edper) Bronfmans and the 'Seagram' Bronfmans.

Susan Gittins' Behind Closed Doors: The Rise & Fall of Canada's Edper, Bronfman & Reichman Empires (Toronto: Prentice-Hall Canada 1995) is breathless. Samuel Bronfman: The Life & Times of Seagram's Mr Sam (New York: Brandeis Uni Press 1992) by noted Holocaust historian Michael Marrus and The Bronfmans: The Rise and Fall of the House of Seagram (New York: St Martins Press 2006) by Nicholas Faith have more bite.

Canadian business historian Peter Newman provided an upbeat and panoramic account of the family in Bronfman Dynasty: Rothschilds of the New World (New York: Atheneum 1979). Ronald Weir's The History of the Distillers Company, 1877-1939: Diversification and Growth in Whiskey and Chemicals (New York: Oxford Uni Press 1995) offers perspective.

Bruce Wasserstein's Big Deal (New York: Warner 1998) is a useful introduction to the business of assembling and disassembling the US media empires.

Dennis McDougal's The Last Mogul: Lew Wasserman, MCA & the Hidden History of Hollywood (New York: Random 1998) is a warts and all account of one of the less lovable movie czars. Shirley Temple's 1988 autobiography Child Star depicts her firing by Wasserman (1913-2002):

- "Why?" I yelped. "Because you're through." His eyes were unwavering, inky black. "Washed up." I started to cry. "Here," he said, pushing a Kleenex box across the desktop. "Have one on me."

There's a similar view in Connie Bruck's crisp When Hollywood Had a King: The Reign of Lew Wasserman, Who Leveraged Talent into Power and Influence (New York: 2003), Dan Moldea's Dark Victory: Ronald Reagan, MCA & The Mob (New York: Viking 1998) and William Knoedelseder's Stiffed: A True Story of MCA, the Music Business & the Mafia (New York: Harper 1994). Wasserman also features in Janet Sharp's Mr & Mrs Hollywood: How Lew and Edie Wasserman Created a Global Entertainment Empire (New York: Carroll & Graf 2003).

MCA's competitors William Morris and CAA were profiled in Frank Rose's The Agency: William Morris & The Hidden History of Show Business (New York: Harper 1996), Power To Burn: Michael Ovitz & The New Business of Show Business (New York: Birch Lane 1996) by Stephen Singular - more warts - and Ovitz: The Inside Story of Hollywood's Most Controversial Power Broker (New York: McGraw-Hill 1997) by Robert Slater.

For Motown and other recording companies see Sharon Davis' Motown, The History (New York: Sterling 1989), Berry Gordy's Berry, To Be Loved - The Music, The Magic, the Memories of Motown (New York: Warner 1994) and Rich Cohen's Machers & Rockers: Chess Records and the Business of Rock & Roll (New York: Norton 2004). Jory Farr's Moguls & Madmen: The Pursuit of Power in Popular Music (New York: Simon & Schuster 1994) is splenetic.