Liberty Drops Out of VUE Race

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Liberty Media Corp. has quietly backed away from the auction for Vivendi
Universal’s U.S. entertainment assets, paring the field of potential bidders for
Vivendi Universal Entertainment down to two.

Liberty, which owns a 3.5% stake in Vivendi Universal, was apparently turned
off by a requirement by the French conglomerate that bids for VUE -- which
includes theme parks, Universal Studios and cable channels USA Network, Sci Fi
Channel and Trio -- start at $14 billion.

According to a source familiar with Vivendi, the French conglomerate also set
Aug. 18 as the deadline for the next round of bidding.

Liberty declined comment.

Sources familiar with the bidding process confirmed reports last week that
Liberty dropped out of the bidding. Those same sources said Liberty could
re-enter the bidding at a later date, probably for just the cable channels.

Liberty’s decision follows Metro-Goldwyn-Mayer Inc.’s announcement last month
that it dropped out of the VUE bidding. MGM was though to have submitted the
highest formal bid so far for the assets -- $11.5 billion in cash.

Liberty had originally planned to combine the VUE assets in a spinoff
including its Starz Encore Group LLC premium cable networks. But since Liberty
had agreed to pay Comcast Corp. $7.9 billion in stock and notes for the 57.5% of
cable shopping channel QVC Inc. that Liberty didn’t already own, the desire for
Liberty to own the VUE assets has waned.

That apparently leaves General Electric Co.’s NBC television unit and a
consortium led by former Vivendi vice chairman Edgar Bronfman Jr. as the
remaining bidders for VUE.

Comcast could also enter the picture, but analysts are split over whether the
MSO is serious about submitting a bid.

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