Vivendi Universal last Wednesday said it is seeking to resolve a dispute between the French conglomerate and Barry Diller’s InterActiveCorp that could throw a wrench in Vivendi’s plan to merge its U.S. entertainment assets with NBC by June. It also has asked the Delaware Court of Chancery for a declaratory judgment that would effectively cancel Mr. Diller’s veto rights over decisions at Vivendi Universal Entertainment.
Although Vivendi officials maintain that Mr. Diller has no power to block the NBC-VUE merger, his stake in VUE does include veto rights that could prove problematic in getting the deal completed. Vivendi Chief Financial Officer Jacques Espinasse has said NBC parent General Electric won’t close the NBC-VUE merger unless those veto rights are canceled. GE will control 80 percent of the newly merged company, to be called NBC Universal, while Vivendi will own a 20 percent stake.
Mr. Diller obtained his veto power over VUE when he sold certain entertainment assets to Vivendi Universal in 2001. As part of that sale, Vivendi said, Mr. Diller agreed to turn over those veto rights once Vivendi secured a letter of credit that effectively eliminates Mr. Diller’s financial risk in VUE. Vivendi said it has obtained a letter of credit worth $1.9 billion but has not been able to get Mr. Diller to turn over his rights.
Separately, Vivendi said it posted a fourth-quarter loss of 642 million euros ($782.8 million), vs. a year-earlier loss of 9.8 billion euros, while revenue tumbled 55 percent to 7.2 billion euros ($8.8 billion). The results reflected Vivendi’s continued shedding of noncore assets and an improvement at the company’s telecom and entertainment businesses.
Hughes Renames to DirecTV Group
Hughes Electronics began trading under its new name, DirecTV Group, last week. The company changed its name to reflect News Corp.’s focus on DirecTV. As part of the name change, DirecTV will trade under the symbol DTV.N.
Omnimedia Weighing Options
Martha Stewart Living Omnimedia said it is evaluating the future of its TV series “Martha Stewart Living” following the conviction of its namesake and her decision last week to step down from the company. In its 2003 annual report filed last week with the Securities and Exchange Commission, the company said the series now plays in just 50 percent of the United States, down from 90 percent before the verdict. Observers believe production will stop after this season.
Cablevision Says Probe Is Complete
Cablevision Systems last week said its internal investigation into accounting irregularities is complete. The Bethpage, N.Y.-based company presented new financials for 2001 and 2002, revising upward its 2002 profit to $93.9 million, or 32 cents a share, from a previously reported $90.1 million, or 31 cents. Revenue for 2002 was largely unchanged at $3.8 billion. For 2001, it revised downward its profit to $981.5 million, or $3.48 a share, from $1 billion, or $3.57. Revenue remained largely unchanged at $3.6 billion. Cablevision passed on the results to the U.S. Attorney’s Office and the Securities and Exchange Commission.