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USA Networks, Vivendi discuss shuffling assets
By Times staff and wire reports Vivendi Universal chief Jean-Marie Messier and USA Network's Barry Diller confirmed Tuesday they're in talks to reunite some of their entertainment assets. Vivendi owns 43 percent of USA Networks' entertainment unit -- including the USA and Sci Fi cable channels -- but has no decisionmaking power. Diller controls 74 percent of the voting power. Gaining full control in a possible acquisition would finally give Vivendi a surefire vehicle for delivering its own films and programing to U.S. viewers. Such a deal also would have Vivendi buying back the same Universal TV assets that Seagram scion Edgar Bronfman Jr. sold to Diller for $4-billion in 1997, just three years before Bronfman sold Seagram's remaining liquor and media assets, including Universal Pictures, to Vivendi for $40-billion. Home Shopping Network of St. Petersburg apparently would not be affected by any Diller deal with Vivendi concerning the entertainment properties because it is part of USA Networks' electronic retailing division. Also unaffected would be the the company's information and services division, which includes Ticketmaster and Hotel Reservation Network. USA's entertainment division includes cable networks such as USA Network and the Sci Fi Channel; Studios USA, which produces television programming; and USA Films, which produced such films as Traffic and Nurse Betty. Beyond confirming negotiations, both sides disputed recent reports they're on the brink of an announcement. In a statement, Vivendi officials said "there have been ongoing discussions," but that the rumored $13-billion to $18-billion price tag was "totally absurd." The rumored terms "are incorrect," Diller told the New York Daily News. "They're just creating a lot of false noise." Niraj Gupta at Salomon Smith Barney said Diller would benefit because USA would emerge "with a pristine balance sheet to pursue additional consolidation opportunities in the Internet commerce industry." The entertainment division reported $1.6-billion in revenues last year, or 35 percent of the USA Networks Inc. total $4.6-billion in sales. Gupta estimated the value of USA's entertainment assets at $10-billion to $12-billion. Richard Read of Credit Lyonnais Securities was skeptical that Vivendi would complete a deal for USA's entertainment division. "Why would Barry do that? And what would Vivendi use for currency?" he asked. "Right now it's just mental gymnastics." Read said Diller historically has used the cash flow from USA's entertainment division, as well as Home Shopping Network, to build up his portfolio of Internet businesses. "It's really in vogue to diss established media assets because advertising revenues are so bad," he said. "But they're good assets, with strong cash flow. Work has to be done on them, but it certainly isn't the kind of thing you want to throw out." Vivendi's American depositary shares fell $1.20 to close at $50.60 in trading Tuesday on the New York Stock Exchange. USA Networks jumped $1.10 to $25.05 in trading on the on the Nasdaq Stock Market. Separately, Home Shopping Network said it completed some internal restructuring last week. The 24-person technical support call center was eliminated, with duties transferred to an outside contractor. Six positions in HSN's partnership program were also cut. Of those employees affected by the changes, all but eight were moved to new postions elsewhere in the company, which employs about 3,000 in St. Petersburg. -- Times staff writer Kris Hundley contributed to this report, which includes information from the New York Daily News and Associated Press.
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From the Times Business report
From the AP
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