Universal Deal Likely to Usher In Big Changes.

Vivendi's $34 billion takeover of Seagram Co. and its local Universal Studios Inc. operations sent the entertainment industry buzzing last week about the probable fate of Universal's current American management and other related topics.

Analysts and observers say Vivendi can't possibly manage Universal from France, so it will rely on a local team of studio executives. And many doubt they'll go with the existing slate.

"Realistically, they know they can't run it here," said veteran entertainment analyst Art Rockwell. "The key issue in management was what to do with (Seagram CEO) Edgar Bronfman Jr. They now have him overseeing the music business. He has been removed from the rest of Universal's film and TV production. What they need now is a professional heavyweight to run the studio. They know that the present structure of Edgar Jr. and Ron Meyer (Universal's chairman) isn't a model that will work."

Many experts agree with Rockwell. Universal officials aren't talking about Meyer's status, or whether he will be replaced. If Pierre Lescure, who as head of Vivendi-controlled Canal Plus SA will be placed in charge of Universal's film and TV operations, decides to look elsewhere, the buzz is that he might turn to Terry Semel, former co-chairman of Warner Bros.

Semel was out of town and unavailable for comment last week, and his assistant at Windsor Media, his production company in Westwood, said he "would have no comment" on the matter.

A Warner Bros. insider said he doubts that Semel would join Universal because he is a close friend of Meyer. Moreover, he would be reluctant to take charge of a company unless he was made a significant owner in the studio.

"He doesn't need the money and he doesn't want to work for somebody else and make millions for them unless he has a major equity position," the source said.

Yet rumors persist that Semel is at least discussing the matter with Vivendi officials.

Big-star approach

If Semel was put in charge of Universal Pictures, those who know him believe he would revive the model he used so successfully at Warner Bros., at least until the strategy started to backfire in the late 1990s.

"It will be big pictures with big stars," one former Universal executive said. "It will be the Mel Gibson and Julia Roberts-type stars."

But most observers agree that Warner Bros. became too dependent on aging stars like Clint Eastwood and did not respond to the changing tastes of the youth market. It is highly uncertain whether Semel could regain the magic touch he was known for in the late '80s and early '90s, when Warner Bros. was regularly the top money-making studio in Hollywood.

Amid the buzz about installing Semel or another Hollywood veteran at Universal, several industry experts agreed that the new French owners will probably exert more control over the studio than the Japanese did when Matsushita Electrical Industrial was in charge but not very much more.

"Canal Plus is a company that has experience with entertainment," said Frank Price, former chairman of Columbia Pictures and a Universal TV and film executive. "Sony and Matsushita are hardware manufacturers."

Leonard Goldberg, an independent producer and former head of Twentieth Century Fox's film arm, believes Lescure will have a tough time dealing with Hollywood because of the cultural differences between France and America.

"History has borne this out," Goldberg said. "Foreign companies have a very difficult time dealing with Hollywood. Our culture is so different than other cultures. Also, the movie business in this country is unlike any other business and is so much a part of the American culture. You can't have someone come in from the Harvard Business School or the London School of Economics to oversee it. Their financial models don't work."

Moreover, he said, running Canal Plus isn't the same as running a movie studio, whether Lescure starts hanging out at Spago during visits to Hollywood or stays in touch by cell phone while sipping champagne at Harry's Bar in Paris.

"You have to be in the trenches with the Sherry Lansings (who runs Paramount's film division) and the Bill Mechanics (who runs Fox) and the people from Disney and Warner Bros.," Goldberg said.

Getting burned in Tinseltown

Lescure is no newcomer in dealing with Hollywood. As head of Europe's top pay-cable company, he has wide experience with the entertainment industry. But past French forays into Hollywood -- including those in which Lescure himself was directly involved -- have been mostly disastrous.

Credit Lyonnais got burned when it became involved in a buyout of Metro-Goldwyn-Mayer Inc., and Canal Plus itself lost millions in its deal to buy a slice of Carolco Pictures, which produced the hit "Rambo" movies but went bankrupt in 1995. As head of Canal Plus, Lescure also invested in a slate of movies produced by Arnon Milchan's Regency International, losing millions more when most of them flopped.

Despite lessons learned from those painful experiences, Lescure will face a steep learning curve when it comes to the American way of making films, industry observers said.

In France, creative artists -- writers, directors and actors -- have much more control of their vehicles and do not take a back seat to the "suits" on the business side of filmmaking. Indeed, there are laws in France that maintain the rights of the artist.

"The artist is king, which is why they often do interesting things -- which are often quite disappointing at the box office," Price said.

During the filming of one movie he made in France, Price recalls that he objected to the original score of the film and sought to replace it. But he discovered it would have been illegal to change the score without the permission of the original composer.

"What composer would agree to replace himself?" he said. "The music sounded good to him. I had to go with him; I had no choice."

Nonetheless, Price believes that the French takeover of Universal is ultimately good news for the film industry as a whole.

"It's exciting from the standpoint of the motion picture business, which is now global and worldwide," he said. "Having ownership of these companies spread internationally is very healthy because it helps keep the business international."