YOU ARE HERE: LAT HomeCollections

Diller Can't Get Assets, Vivendi Says

Conglomerate says conditions the media mogul agreed to in a prior deal bar him from bidding on properties.

June 11, 2003|Richard Verrier | Times Staff Writer

In a further chilling of relations between Barry Diller and Vivendi Universal, the French conglomerate said Tuesday that the media mogul could not be a contender for the Universal properties after all.

Vivendi said in a statement that Diller was governed by "standstill obligations" that bar him from acquiring the company or any of its subsidiaries. The company said Diller agreed to those obligations as part of his earlier $11-billion sale of then-USA Network's entertainment assets to Vivendi.

The disclosure, it turns out, was buried in a December 2001 filing and not widely known until Tuesday's announcement. Some on Wall Street had speculated that Diller might team up with Liberty Media Corp.'s John Malone to make a run for the Universal assets. Liberty is among several companies and investors weighing possible bids for all or part of Universal, including its movie studio, theme parks and cable stations.

In recent months, however, Diller has downplayed any interest in buying Universal. He resigned as chairman of Vivendi Universal Entertainment this year under pressure from investors to focus on his electronic-commerce businesses.

For that reason, the disclosure didn't generate much reaction among investors in USA Interactive or Vivendi. "I don't think it will be a huge issue," said Andrew Wallach, managing partner of Cumberland Associates. "It's a moot point."

Some company observers interpreted the move as an effort by Vivendi to put Diller in his place after the mogul publicly criticized Vivendi over a tax dispute and touted the control USA holds over the sale of the Universal assets.

Diller has maintained that the company would owe USA hundreds of millions of dollars in taxes if it sells certain Universal assets, such as the Sci Fi Channel. Vivendi has countered that it can structure a deal to sell the assets without triggering such tax penalties.

Diller declined to comment Tuesday.

Vivendi made the disclosure as part of statement confirming that Diller intended to exercise his rights to purchase 28 million warrants to buy back USA Interactive shares from Vivendi, giving the cash-strapped giant $407 million.

The transaction reflects Diller's desire to create more distance between USA and Vivendi, company sources say.

Los Angeles Times Articles