Diller Wards Off VUE Suitors


In his ongoing dispute with Vivendi Universal S.A., USA Interactive chairman Barry Diller has taken off the kid gloves, warning potential suitors of Vivendi Universal Entertainment assets — in the form of a Securities and Exchange Commission filing — that any deal will have to have his blessing first.

Diller, who resigned as co-CEO of VUE last month, has been rumored to be in the running for the company's assets, which include cable networks USA Network, Sci Fi Channel, Trio and NewsWorld International; Universal Studios, Universal Music Group and the Universal theme parks.

Diller has denied that USA Interactive itself would be interested in owning the cable channels. But it owns 5 percent of VUE and, according to the SEC filing April 15, has considerable say over who will ultimately get those assets.

USA Interactive filed a five-page "Q and A" with the SEC last Tuesday night, because it had received hundreds of inquiries about USA Interactive's rights regarding VUE.

Ball of confusion

In the filing, USA said that despite its best efforts, "we have not seen anything that clearly and correctly answers all of the questions; instead, there has been a torrent of conflicting and confusing information."

Perhaps most ominous — especially for prospective suitors — is the portion of the filing that states that USA Interactive would have "significant issues" should VUE be acquired by a media company with competing interests to the online content giant.

"USA would, under those circumstances, assess the situation carefully to see if any such action potentially can adversely affect USA's interests and act accordingly," the filing states.

It's a warning

At least one analyst said that the filing should send a message to VUE's potential suitors.

"If they go out with an SEC filing that's basically a warning, you'd have to take that very seriously and understand very clearly where Vivendi's legal ground stops and his [Diller's] starts," Sanford Bernstein & Co. media analyst Tom Wolzien said. "That's basically what that filing is saying — just don't assume that Vivendi has got all the rights."

Texas oilman Marvin Davis is the only official bidder for VUE, offering $20 billion. Others interested include Viacom Inc. (chairman Sumner Redstone has had informal talks with Vivendi chairman Jean-Rene Fourtou), General Electric Co.'s NBC television unit, Liberty Media Corp. and Diller.

Also last week, USA Interactive sued in Delaware Chancery Court over an earlier dispute concerning $620 million in tax-related payments. USA says it is owed the money; Vivendi argues that figure is too high.