Seagram Co. has agreed to pay $7 billion to buy 80 percent of the movie and entertainment company MCA Inc. from Matsushita Electric Industrial Co., people close to the deal said yesterday.
Matsushita acquired MCA in 1990, during the heady days of Japanese investment in the United States, but has agreed to cede control after failing to master the vagaries of Hollywood and a disgruntled U.S. management team.
The money for the acquisition will come from the sale by Seagram of nearly all its 25 percent stake in DuPont for $8.8 billion in cash. That transaction was announced last night.
Whether Seagram can get better results than Matsushita from MCA, the big movie, television and music company, remains an open question, because the acquisition will mark such a radical departure from Seagram's core spirit and beverage business.
Seagram President Edgar Bronfman Jr. declined to comment last night, apparently because the deal had not been signed. But top executives of MCA, who are expected to leave the company, had already been told that the company was changing hands.
"I feel sad because I have been around here for 59 years," said Lew Wasserman, the 82-year-old chairman of MCA who has run the company for decades. "But life goes on."
The change of owners and managers for MCA could have broad ramifications in Hollywood.
The company is best known for the blockbuster movies by Steven Spielberg like "E.T.," "Jurassic Park" and "Schindler's List" and music produced on the Geffen Records label.
But lately MCA has lost momentum and now has only tenuous ties to Mr. Spielberg and record executive David Geffen, which are based primarily on their personal relationships with Mr. Wasserman and the president of MCA, Sidney J. Sheinberg.
For Matsushita, which paid $6.6 billion for MCA, the withdrawal to a position in which it holds a minority stake in MCA could suggest a model for retrenchment to another Japanese giant, Sony Corp.
Sony has lost billions of dollars on Columbia Pictures Industries, the Hollywood studio it acquired in 1989, amd jas beem cpmsoderomg ways to scale back that investment.
But of Sony stays the course, Matsushita could be embarrassed, some financial analysts in Japan said.
"It's an admission of defeat," said Joseph A. Osha, technology analyst at Smith New Court (Japan) Ltd. "But I think it's smart to admit defeat because there's no way they are ever going to be able to integrate this business."
Though Seagram has no experience in running an entertainment company, doing so has been a dream long nurtured by the Bronfmans, the Canadian family that founded Seagram more than 70 years ago and still controls it.
The chairman of Seagram, Edgar M. Bronfman, who is 65, was a big shareholder and chairman of Metro-Goldwyn-Mayer in the late 1960s, before selling his stake to the investor Kirk Kerkorian.
And the current thrust into the entertainment field has been championed by the younger Mr. Bronfman, the president of Seagram, who is 39.
He spent several years as a movie scriptwriter earlier in his career and in 1993 was responsible for the acquisition by Seagram of 15 percent of Time Warner Inc.
Some analysts said yesterday that Seagram was paying too high a price for its stake in MCA, given the recent performance of MCA. But they said the bigger issue was who would run the entertainment company, whose holdings include the Universal Pictures movie studio, the Universal Television programming unit, several record labels, theme parks and a book company.
Asked yesterday if there was a chance that he would stay at MCA, Mr. Wasserman, the chairman, said: "I have no idea. It's free enterprise. If they buy it and pay for it, they can do what they want to."