EDGAR’S LONG, STRANGE TRIP TOWARD R-E-S-P-E-C-T

With EMI expected to raise its offer to buy Warner Music Group with a cash-enriched proposal of $30 a share or more, Edgar Bronfman Jr. may be about to finally earn some respect—from Wall Street, if not from the music business. If controlling investors Thomas H. Lee Partners, Providence Equity Partners, Bain Capital and Edgar himself accept EMI’s offer, they’ll undoubtedly drink a toast to Bronfman for bringing them an overall profit on their initial investment (collectively, the put up $1.25 billion to buy Warner Music) estimated at north of $4.5 billion, including $3.23 billion in pure profit out of this latest windfall—adding up a whopping 263% payoff. So says The New York Times today.

Rival executives continue to take shots at Bronfman, whose career-defining move to this point was losing between $3 billion and $6 billion of the family fortune on the Seagram/ PolyGram/Vivendi disaster. Said one music industry source to Fortune, "Edgar is Prince Charles. He's the poor little rich boy." Said a film executive, "He's a smart person, but I think he's way out of his depth, and I don't see any sense of vision."

Meanwhile, the subplots continue to roil below the surface at WMG, where turmoil continues between U.S. boss Lyor Cohen and the company’s executive staff, in particular Warner Bros. Records chief Tom Whalley, who is said to now be virtually ignoring his boss, having had his fill of Cohen’s ongoing hostile demeanor. Just last week, Cohen was heard ranting and raving at one major West Coast manager about some minor negative press on an obscure music trade website.

As for the continuing mating dance, The Times of London reported on Monday that EMI, which already has debt issues, needs to raise new equity to beef up the cash element of its upcoming bid. The British company’s apparent plan involves the selling of Warner/Chappell Music, which some value at $2.2 billion, post-acquisition, but will need to come up with additional monies to cover the purchase. This is a no-brainer, since Warner/Chappell and EMI Music Publishing control 35% of the publishing market between them, a probable antitrust issue. While most EMI shareholders are believed to be in favor of the acquisition, it’s been reported that asset management firm Schroders, which has at least a 10% stake in the company, will oppose it.

EMI could be willing to raise its bid $200 million, to $4.4 billion, a number of U.K. publications speculated over the weekend. Laura Martin, media analyst at Soleil-Media Metrics, said the majority owners would agree to sell WMG for between $30 and $33 per share. “We think EMI can afford this and will raise its bid,” Martin said. But other analysts cautioned that EMI runs the risk of overpaying.

The three investment firms and Bronfman still own 75% of Warner Music, according to The N.Y. Times, and they control nine of the company's 13 board seats. According to WMG's most recent proxy, T.H. Lee owns 37.9%, Bain 16.2%, Bronfman's Music Capital Partners LP 9.6% and Providence 8.7%. But Fortune estimates Bronfman’s stake at 12%.

What analysts really care about, the N.Y. Times asserts, is how fast digital music sales are growing, and WMG has almost 25% of the digital album market year-to-date, disproportionate to its overall marketshare. But cynics argue that Bronfman is mortgaging the company’s future digital rights for monies now to boost the stock price.

If EMI buys WMG, Bronfman will be out of a job, Fortune noted last week, adding that some think Edgar will be crushed if he has to give up his present job. But he’ll be making a ton of dough, and he’ll get mucho respect from Wall Street, although he’ll still be the Rodney Dangerfield of the music biz.