Bronfman And Diller: Together Forever?

Edgar Bronfman Jr. should feel satisfied. Since December, the Seagram Co. chief executive has seen the stock of the Montreal-based company his grandfather founded 76 years ago rise more than 34%. Seagram was also set to release strong quarterly results on Feb. 9. And though Time Warner Inc.'s planned merger with EMI Group PLC will eclipse the music empire the younger Bronfman has assembled, his Universal Music Group is, for now, the largest on the planet.

But despite this, the pressure is on Bronfman to do even more. For all of his wheeling and dealing in recent years to establish Seagram as an operating company in entertainment and beverages geared heavily to music, he has two big problems: First, like other old media conglomerates, Seagram risks being marginalized in the wake of the merger of America Online Inc. and Time Warner. And second, there is Seagram's lucrative but unusual relationship with Barry Diller's USA Networks Inc. The partnership, which requires each to sign off on big ventures that USA would consider is looking more and more like a roadblock to both companies' plans to compete in the new media landscape.