Comcast Crashes VUE Auction Party

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The auction for Vivendi Universal Entertainment got a bit more interesting last week, after reports surfaced that Comcast Corp. is in preliminary talks with VUE parent Vivendi Universal S.A. to acquire the assets.

According to sources familiar with the matter, Comcast is in the very early stages of negotiations with Vivendi and could ultimately decide that it does not want to participate.

But the addition of a sixth possible bidder — and one with the financial muscle of Comcast — adds a new wrinkle to what has been a contentious bidding process for VUE.

Comcast declined to comment. Officials at Vivendi did not return calls for comment.

Vivendi placed VUE on the block early this year, in an effort to raise money to pare down Vivendi's substantial debt. Bids on the assets — which include cable channels USA Network, Sci Fi Channel, Trio and NewsWorld International, the Universal film studio and the Universal theme parks — have come in at between $11 billion and $11.5 billion. Comcast would join five other known bidders for VUE: Liberty Media Corp., Viacom Inc., General Electric Co.'s NBC television unit, Metro-Goldwyn-Mayer Inc. and a group headed by former Vivendi vice chairman Edgar Bronfman.

While sources said it is unlikely that Comcast is very serious about a VUE purchase, they added that the assets would make a good fit for the Philadelphia-based MSO.

Comcast already owns interests in several cable channels, including E! Entertainment Television and The Golf Channel, and VUE's film studio could provide an extensive library of content to fuel the MSO's video-on-demand offerings.

Comcast could raise between $10 billion and $12 billion just by monetizing its joint cable ventures, its shares of AOL Time Warner Inc. stock and its 21% interest in Time Warner Cable.

But whether Vivendi will sell VUE, keep it or sell a portion of the unit to the public in an initial public offering is still up in the air. Adding to the uncertainty is the high price Vivendi is reportedly asking for the assets — $14 billion to $15 billion.

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