Archive for January, 2011

Shed a tear for Edgar Bronfman Jr., who has just been found guilty of insider trading in France. The alleged activity dates back a decade when he became entangled with Jean-Marie Messier whose Vivendi acquired Seagram and went blooey in the process. As a result, Edgar, the subject of my 2004 book, The Icarus Factor, lost three-quarters of his family’s fortune by turning $8 billion into $2 billion.

For the book I interviewed Edgar Jr. and 100 other people who knew him and I don’t believe he’s capable of criminal activity. Neither did the prosecutor who wanted to drop all charges. But in the weird world of French courts, the judge can disregard all such views and find the defendant guilty as charged. Edgar has been fined five million euros and given a suspended sentence. He says he will appeal.

Edgar could have been a la-de-dah trust baby who lived off family funds but he wasn’t. Instead, he’s been going to work every day since he was fifteen. He also bears the burden of being designated among the third generation by his grandfather, Sam Bronfman, to run the business. Sam, that’s the same guy who said, “Shirtsleeves to shirtsleeves in three generations.” Edgar has been trying to prove him wrong ever since, without success.

Edgar recently decamped New York, the city of his birth, and moved his family to London. He lived in London when he was a teenaged gopher on Melody, the first movie by David Puttnam, the director who later delivered the wondrous Chariots of Fire. Edgar and his first wife, Sherry, also lived in the British capital. I guess he wants his current wife, Clarissa, and their large brood also to enjoy his beloved London.

Meanwhile, he continues to seek redemption as CEO of Warner Music. As close as he’s come to success is that Warner hasn’t done as badly as the competition in a dying industry. But he’s stuck in limbo. He can’t give up trying for fear that those who regard him as a dilettante and a failure would dismiss him as a quitter, too. At 55, Edgar has never been a quitter. If he were, he’d probably have been better off.

So, how is Piers Morgan doing in his first week replacing the inimitable Larry King on CNN? I’d give him a tentative three stars out of five.

Interesting that his first two guests also do interviews for a living: Oprah Winfrey and Howard Stern. Presumably Morgan the Brit wanted to show the world he could go toe-to-toe with the toughest in America. Well, maybe he can, but I find Morgan a tad aggressive for that time of night. He even admitted in his hour with Stern that he was trying to ask outrageous questions. At one point, he wondered whether Stern colored his tousled hair and tugged a few strands to see if they were real. I’m not sure if that counts as outrageous or whether the action tipped into the territory of ludicrous. There was a similar weird moment with Oprah when he demanded, “Emote with me here.”

Perhaps the most telling query of the two nights came at the end of his interview with Oprah. Even though Oprah had already said, “Ooh, you’re good,” Morgan had to ask, “How did I do?” “Surprising,” was her response. Morgan couldn’t help himself and pressed, “Do I take that as a positive?”

What a sad narcissist. Even Stern allowed as how he was learning there was more to life than “me.” I was getting tired of Larry King’s overweening sense of self. Piers Morgan has done the impossible; he’s managed to replace King with an even larger ego.

Of all the analysts watching Research In Motion, few have been around as long as Michael Urlocker of GMP Securities. Urlocker was at Credit Suisse First Boston when he initiated coverage of RIM in February 1999, fifteen months after the company went public.

“RIM has the lead in this growing technology,” he wrote in his first report about the emerging email market. “We see RIM as a high-risk, high-reward play on what could become the next Palm Pilot.” Urlocker put a buy on the stock at C$14.25. A year later, RIM’s share price was C$121.90.

In his most recent report, dated January 12, Urlocker took a fresh approach to the numbers by looking at trends in different markets. He points out that while U.S. sales have been declining for a year, sales in other markets have been rising and now surpass the U.S. Assuming that pattern continues, for fiscal 2012 he predicts U.S. sales to fall 5 per cent, Canada to grow 18 per cent, the U.K. to rise 25 per cent and the rest of the world to be up 50 per cent for a total of 62 million units.

But, notes Urlocker, customer satisfaction has weakened; there is fragility in RIM’s franchise. “RIM does not have an earnings problem; it has a product and market share problem.” In the U.S., until recently RIM’s best market, RIM’s share of smartphone sales has fallen from 35 per cent to 19 per cent. Apple is down, too, while Android rose from 15 per cent to 40 per cent.

Such a decline in the U.S. could be a warning signal for other international markets. On the other hand, “BlackBerry sales are growing strongly in emerging markets and early previews of the tablet report the product is impressive and has good potential.” Moreover, he says RIM could be seen as an attractive takeover target but needs to boost software development and improve consumer marketing.

Bottom line, after being negative for a while, Urlocker likes RIM again. He’s changed his rating on RIM from “reduce” to “buy” and hiked the target price from US$54 to US$70.

When Derek Burney was Canada’s ambassador to the U.S. he liked to tell a joke to American audiences. It went like this. A man on a wharf in the Maritimes notices some lobsters in a pail. It looks to him as if they could easily climb out and escape. He asks the lobster boat owner, “Shouldn’t the pail be covered?” “Oh no,” came the reply. “Those are Canadian lobsters. If one of them gets near the top, the rest of them will pull him back down.”

We do love to tear down any one of our number who becomes successful, don’t we? Americans get their pleasure from redemption. They admire sinners who find a way back. Bill Clinton and Jimmy Swaggart come to mind.

I am not one of those Canadians who dislikes successful people whether out of envy, spite or just plain bad habit. Take the rise of Ken Whyte at Rogers Media. As far as I’m concerned his trajectory is a rocket to be celebrated. In addition to the major magazines already under his scrutiny (Macleans, Chatelaine and Canadian Business), he has just been handed responsibility for all the company’s French-language consumer titles as well: Loulou, Chatelaine, L’actualite and Hello! This puts him among the top rank of Canadian media bosses of all time.

I first met Ken when Conrad Black bought The Financial Post in 1998 thereby adding a few ink-stained wretches such as myself to National Post just in time for the launch. As editor of this brazen new national paper, Ken’s philosophy was: “Let a thousand flowers bloom.” Everyone in the newsroom felt his leadership and battled to write stories worthy of page one.

Of course, Ken Whyte could also drive everyone crazy. At some point each Friday, when editors and writers were finalizing pieces for the Saturday paper, Ken would throw everything overboard and assign a dozen new topics. His editorial instincts were always right.

In my case, I was the beneficiary of some plum assignments. And there were numerous occasions where his personal intervention helped me get stories into the paper that other editors feared or set lawyers fretting.

When I left National Post in 2001, I told Ken he would be the greatest journalist of his generation. Nice to see my prediction coming to pass.