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Universal, Viacom Deal Seems Near

September 12, 1997|SALLIE HOFMEISTER | TIMES STAFF WRITER

Universal Studios Inc. is close to signing a deal to buy the 50% of USA Networks it does not own from its partner, Viacom Inc., for $1.7 billion, according to sources close to the negotiations.

The transaction, which could be finalized this week, includes a programming provision under which Universal would buy specific movies or TV titles from Viacom's Paramount Pictures studio to air on USA, one of the nation's highest-rated cable channels, which reaches about 70 million households.

In a joint statement, the partners acknowledged that settlement talks had resumed.

The agreement would end an acrimonious legal fight that many on Wall Street have criticized as a waste of time and resources. Analysts say the proposed deal is in line with their expectations and would avert a court decision that neither company would like.

For Universal, USA Networks and its start-up, Sci-Fi Channel, provide distribution outlets for its movie and television libraries. In addition to its cable group, which includes MTV, VH-1, Nickelodeon and TV Land, Viacom owns half of the UPN television network.

Judge Myron Steele of the Delaware Chancery Court said he would rule this month on a remedy to dissolve the partnership between Universal and Viacom. In May, the judge ruled that Viacom had breached a partnership agreement by starting and operating cable channels in competition with USA.

But Steele delayed action and instead ordered the parties to negotiate a solution within a given time or he would impose a remedy.

Sources said the partners had worked through last weekend, with only a few minor points left to negotiate. They said Viacom recognized it would have to pay a substantial capital-gains bill.

Under an earlier settlement, Viacom had agreed to buy out its partner for $1.45 billion. But the deal fell apart because of the tax consequences for Universal.

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