Just two Vivendi bidders remain

Bronfman group, NBC vie for assets

By Associated Press, 8/27/2003

PARIS -- Vivendi Universal yesterday narrowed the field of bidders for its entertainment assets to two: General Electric Co.'s NBC and an investor group led by former Seagram Co. chief executive Edgar Bronfman Jr.

After a four-hour board meeting, the French media and utilities conglomerate said it would enter separate, in-depth talks with the "two strongest" bidders. In either case, a deal would leave Vivendi a "substantial minority interest" in a US media company, the company said in a statement.

The move excludes CBS and MTV owner Viacom Inc., which had expressed interest only in Vivendi's cable channels, USA, Sci-Fi, and Trio. The other assets for sale include the Universal movie and TV studios and several theme parks. Universal's music company had been for sale but was taken off the block.

In its statement, Vivendi also said it was still exploring a public offering for Vivendi Universal Entertainment.

Vivendi has been hoping to sell the Hollywood assets for at least $14 billion and use the proceeds to pay down debt.

There had been six potential bidders. Liberty Media Corp. was the latest to leave, saying late Monday that the $14 billion asking price was more than it felt Vivendi's assets were worth to Liberty. The Colorado-based company has a 3.6 percent stake in Vivendi.

Comcast Corp., the largest US cable TV provider, and Metro-Goldwyn-Mayer Inc. had also expressed interest in the assets but later withdrew. Comcast did not say why it was pulling out, but MGM's bid of $11.5 billion was well below the minimum Vivendi executives said they would insist on for the assets.

In July, Vivendi rejected another bidder, oil billionaire Marvin Davis, who once owned Fox Studios, from the applicant pool.

NBC wants to merge Vivendi's entertainment assets with its own holdings. In addition to the network, NBC also has the CNBC and MSNBC cable channels and Telemundo, a Spanish-language broadcaster.

Access to Universal's studios would give NBC a ready source of programming. NBC, the only major network that is not part of a larger media conglomerate, has long been rumored to be on the lookout for a Hollywood studio. CBS is owned by Viacom, ABC is part of the Walt Disney Co., and Fox is part of News Corp.

Bronfman once controlled the Universal assets as the head of Seagram, the Canadian beverage company that bought the studio from Japan's Matsushita Electric Industrial Co. in 1995. Seagram later sold the Universal assets to Vivendi.

Bronfman is leading a group of investors that include Thomas H. Lee Partners, a private equity fund in Boston, and Cablevision Systems Corp., a New York-based cable TV company that owns the cable channels AMC, the Independent Film Channel, and WE: Women's Entertainment.

The sale of the entertainment assets would take Vivendi farther away from the bold and costly vision laid out by former chairman Jean-Marie Messier, who had hoped to create an empire of music, film, mobile phone, TV, and Internet holdings.

Messier was ousted last year and replaced by Jean-Rene Fourtou, who has pursued a fire sale of assets that included Vivendi's publishing arm, Internet holdings, and art works in an effort to turn the company around.

After the sale of the Hollywood assets, Vivendi will still have its mobile phone network, SFR-Cegetel, and Canal Plus, a major European pay-television provider, in addition to its water utilities business.

Vivendi's US-listed shares slipped 8 cents to $16.93 on the New York Stock Exchange.