Fourtou Visit Sets Off VUE Sale Alarms


Vivendi Universal S.A. chairman Jean-René Fourtou made a whirlwind tour of the U.S. last week, meeting with several divisional executives — including Vivendi Universal Entertainment chairman Barry Diller — and fueling speculation that the French media conglomerate is looking to restructure its U.S. operations.

Fourtou, who became Vivendi chairman in July after the very public ouster of former chairman Jean-Marie Messier, is also reportedly set to meet with billionaire oilman Marvin Davis later this month. Davis made an unsolicited $20 billion offer for VUE in November, which Vivendi rejected.

More pressing is a regularly scheduled board meeting in Paris in February, at which Fourtou is expected to update Vivendi's board of directors on the state of its U.S. businesses.

In a joint statement, Diller and Fourtou acknowledged that they met in New York last week and that discussions regarding renegotiating certain aspects of the VUE venture continue. They added that in the interim "no changes in the operating structure or reporting responsibilities are contemplated."

The mere fact Vivendi executives continue to talk with Davis indicates that selling off the VUE assets — which include cable networks USA Network, Sci Fi Channel and Trio — is still a possibility.

Fourtou opened that door last month at an analyst conference in Paris, when he said that he was talking to Diller about restructuring VUE.

VUE was created in 2001, after Diller and USA Networks Inc. sold their remaining interest in the cable networks and USA Studios in a complicated deal valued at about $11 billion. USA Networks — now USA Interactive — got several online assets and the HSN home-shopping channel, plus a 5.5 percent interest in VUE.

Fourtou: 'unwind'

"We should unwind our agreement with Barry Diller," Fourtou told analysts and investors in Paris Dec. 4 as part of a call discussing Vivendi's bid to buy out British Telecommunications Group plc's 26 percent interest in French telephone company Cegetel. "He has agreed to accelerate our talks to see how we can unwind USAI with VUE."

Selling off VUE — or at least a part of it — in a public offering would not be out of character for Vivendi. Saddled with $17 billion in debt, the French conglomerate began selling select holdings last year and has already disposed of about $6.8 billion in assets.

Also adding to the speculation is that Fourtou, once a big supporter of Diller, has recently made moves that bring his backing into question.

Fourtou stripped Diller of some of his powers as chairman of VUE, having executives at Universal Music Group report directly to Fourtou instead of to Diller. Only last November that Fourtou expanded Diller's role, making him co-CEO of VUE, a move said to have incensed French Vivendi directors, who feared he was gaining too much power.

Adding to the acrimony is a claim by USAI — of which Diller also is chairman — that Vivendi reneged on a $620 million payment to offset taxes owed as a result of the sale of the cable networks.

Diller is also rumored to be teaming up with Liberty Media Corp. to launch a bid for VUE. One possible scenario is for Liberty to combine its Starz Encore Group LLC premium-cable business with VUE, then spin off the unit in an initial public offering.