Biz Briefs

Jun 23, 2003  •  Post A Comment

Vivendi Universal moves one step closer June 23 to selling its U.S. entertainment assets, accepting bids from the six parties interested in either some or all of the French conglomerate’s properties.
A source close to the company said that Paris-based Vivendi Universal will likely take two to three weeks to review the bids, thanks in part to evaluations from the company’s two lead investment banks, Citigroup and Goldman Sachs, Vivendi Universal management and the board’s monthly meeting is slated for the end of June. The source said early July would likely be when an announcement is made.
The bids arrive as Vivendi Universal reveals a little more about its thinking with regards to the entertainment assets. While the company has pushed the notion that it would sell either pieces or all of its Vivendi Universal Entertainment unit, Chief Financial Officer Jacques Espinasse last Tuesday said the company was also considering an initial public offering as a way to monetize the assets.
An IPO would likely involve floating between 25 percent and 30 percent of VUE, which includes a film studio, cable TV assets and TV production operations, Mr. Espinasse said. He made the comments during a first-quarter earnings call in which the company also reported a sharply narrowed loss.
A sale of all the entertainment assets, which also include Vivendi Universal’s theme parks, a gaming business and recording giant Universal Music Group, could fetch as much as $20 billion-and would be a significant boost to Vivendi Universal’s efforts to trim its massive debt load.
Among the buyers said to be interested in the Vivendi Universal entertainment assets are Liberty Media; an investment team consisting of Vivendi Universal Vice Chairman Edgar Bronfman Jr., Wachovia Securities, Merrill Lynch and Cablevision Systems; another investment team made up of oil billionaire Marvin Davis, Bain Capital and Texas Pacific Group; Viacom; General Electric’s NBC unit; and MGM.
Gemstar Execs Charged
The Securities and Exchange Commission on Thursday filed fraud charges against Gemstar-TV Guide International’s former CEO and chief financial officer, alleging the duo were responsible for a broad-based scheme designed to inflate the company’s licensing and advertising revenues.
The agency, which has been conducting a months-long probe of Gemstar’s accounting, filed the suit in the U.S. District Court in Los Angeles against Henry C. Yuen, Gemstar’s former CEO, and Elsie M. Leung, the former finance chief. Both were fired in March.
According to the SEC, Mr. Yuen and Ms. Leung overstated revenues from the company’s interactive program guide (IPG) licensing and advertising businesses from March 2000 through September 2002, which, when discovered, forced the company to restate total revenues by at least $223 million.
The agency is seeking civil penalties, to permanently bar the two from running a public company and the disgorgement of any ill-gotten gains earned from the fraudulent behavior.
Liberty Clause Waived
Liberty Media’s standstill obligation was nullified as part of the nondisclosure agreement the media giant signed with Vivendi Universal after expressing interest in acquiring some of the troubled French conglomerate’s U.S. entertainment assets, according to a person close to Vivendi Universal.
The standstill obligation was put in place when Paris-based Vivendi Universal created a joint venture with Barry Diller’s USA Interactive that saw him contributing his television and cable assets to the entity that ultimately became Vivendi Universal Entertainment. The deal clause banned Liberty, the biggest shareholder in USA Interactive, which today changes its name to InterActiveCorp., from making a bid for any or all of Vivendi Universal, including the entertainment unit, for a period of four years.
A Liberty spokesman declined to comment, as did a Vivendi Universal spokeswoman.
The standstill obligation was quite similar to one put in place by Vivendi Universal with respect to Mr. Diller-and one that the company has chosen to enforce by hiring an experienced Los Angeles litigator to handle any legal proceedings related to the Diller case.