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Billionaire Davis Wants to Be in the Picture at Universal

November 22, 2002|Richard Verrier and Claudia Eller | Times Staff Writers

Billionaire Marvin Davis says he is not just kicking the tires.

Only hours after Paris-based Vivendi Universal said it rebuffed his initial $13-billion offer, the onetime owner of 20th Century Fox Film Corp. said he was determined to pursue Universal's entertainment empire, including its studios, theme parks and recording company.

Davis on Thursday was clearly relishing the limelight, even though some privately questioned whether he was seriously interested in the Vivendi properties or just doing what has become his M.O. of sorts -- sniffing around potential ventures, stirring up headlines and then abruptly walking away.

At Spago in Beverly Hills, Davis sat at his regular table in his custom-made oversize armchair, lunching on gazpacho with former Universal Pictures co-Chairman Brian Mulligan, the man considered the architect behind the takeover proposal. As Davis coyly dodged questions about his plans for Vivendi--"I'll let you know" -- one fellow diner and well-wisher was former President Bill Clinton, who circled back through the eatery for a handshake and chitchat at Davis' table.

Davis and his associates dismissed those who are dismissing him as a non-player, saying that the $13-billion deal he pitched for a majority stake in the entertainment assets was a negotiator's starting point. The 77-year-old oilman-turned-deal-maker called it a "full and fair" offer and said he planned to meet with Vivendi executives in January to begin more earnest discussions.

"Marvin's a great entrepreneur. He simply wants to be a mogul again," said Viacom Inc. Chairman Sumner Redstone, who considers Davis a close friend. Redstone said he believed Davis' bid for Universal was serious.

"But his desire for action will not lead him to do something that's not economically sound," Redstone said.

Vivendi's U.S.-traded shares jumped $2.28, or 20%, to close at $14 on the New York Stock Exchange as investors were encouraged by Davis' show of interest, which analysts said could attract other potential suitors.

The offer, said Christopher Dixon, media analyst at UBS Warburg, "underscores the extraordinary value of Universal's portfolio of entertainment."

It all complicates Chief Executive Jean-Rene Fourtou's carefully calibrated plans to restructure Vivendi's U.S. entertainment assets.

Just last week, Vivendi announced that Fourtou would help current entertainment chief Barry Diller oversee a reorganized Universal group. If Vivendi formally rejects Davis' bid, sources said, Fourtou would face greater pressure to expedite plans to spin off the entertainment assets and take them public.

Those in Davis' camp said it was in Vivendi's interest to deal now, rather than wait months for the rewards of an initial public offering. A deal now could infuse billions of dollars in the company as it tries to dig out from its massive debt.

The proposal caused some to question whether there was a personal agenda behind it. "Rivals" might be the nicest way to describe the relationship between Davis and Diller. The two clashed after Davis hired Diller at Fox in the 1980s.

Diller now divides his time between running Vivendi's U.S. entertainment assets and his main job as head of USA Interactive Inc., a sprawling e-commerce business that includes Ticketmaster and online travel service Expedia Inc.

In making his pitch, Davis has noted that many investors question whether Diller can handle the responsibilities of both jobs. He has contended that the company deserves a full-time executive focused exclusively on Vivendi, a source close to Davis said.

"That's the opening he saw," the source said.

Observers noted that Davis' statement made no mention of Diller and said that under his proposal Mulligan would play a "leading role at the company."

It is uncertain, though, whether Diller could stand in the way of Davis' bid.

Diller has considerable leverage in the future of the entertainment assets because of a host of restrictions he negotiated when he sold USA's film and television properties to Vivendi this year. For example, Vivendi could be forced to pay Diller's USA Interactive as much as $2 billion in tax liabilities should certain assets be sold.

But the source close to Davis is not convinced that the contract is airtight.

"Barry is very good at presenting the picture he'd like to present," he said, adding: "He'll get what's coming to him."

New details of the proposed deal emerged Thursday as the beleaguered French media giant confirmed that its management had met with representatives of the Davis group this month to discuss the proposal but had told the representatives that a sale of Vivendi's entertainment assets "was not on the agenda."

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