Liberty Open to Possibly Teaming Up on Vivendi Bid

[AyuRocks]

Liberty Open to Possibly Teaming Up on Vivendi Bid
By Reshma Kapadia

NEW YORK (Reuters) - Liberty Media Corp. CEO John Malone told investors the company was not "explicitly" working with Viacom Inc. on its bid for Vivendi Universal's U.S. entertainment assets at the moment, but left the door open to working with someone down the road.

On a Webcast of Liberty's annual shareholder meeting, Malone downplayed reports Liberty was seeking to partner with other bidders such as Viacom, but said he would not rule out any combinations that may arise down the line.

"They are shopping and so are we, and we are still at an early stage," Malone told reporters after the shareholder meeting in Englewood, Colorado, about the Vivendi bidding.

Vivendi has said about six bidders, including Liberty, have emerged for all or parts of Vivendi Universal Entertainment (VUE), which include cable channels Sci-Fi and USA, movie studio Universal Studios and its related theme parks.

Malone also said Liberty was working independently of Barry Diller, who formerly headed up Vivendi's U.S. entertainment assets and is currently chief executive of USA Interactive . Some have wondered if Diller will also make a bid for some of the assets.

"It's inappropriate to combine interests because he has a different set of objectives and relationships at the present time than we have," Malone said of joining Diller on a bid.

However, Malone -- who is a shareholder in Vivendi and USA Interactive -- said he would not rule out working with Diller after a deal was struck.

"If we were a successful bidder, we would want to have discussions with USA on how to improve relationships between the two entities, but at present time we are on completely independent trajectories," he said.

QVC ON LIBERTY'S SHOPPING LIST

Liberty is also interested in buying Comcast Corp.'s stake in home shopping network QVC. Malone said the two companies have been engaged in talks about the network to decide whether Liberty sells its 42-percent stake in QVC or buys the interest it does not own.

Malone said he expects a resolution by the end of the summer, if not sooner, and said appraisals for the value of their stakes have come in.

"We would be happy to be acquirer of QVC but also wouldn't mind being a very large shareholder of Comcast either (by selling its stake,)" Malone said.

He added that the the company would "undoubtedly" exercise its option to acquire more News Corp. when its option expires in August or September since the options were "in the money." Liberty is News Corp.'s largest shareholder with an 18-percent stake. A company spokesman added an official decision had not yet been made on the options.

Malone stressed that neither the Vivendi Universal Entertainment nor the QVC deal would change Liberty's characterization as a holding company.

"The company is going to be a holding company. The question is what does it hold? Assets it controls and influences or passive holdings in which it has not influence but full liquidity (to sell whenever it wants)," Malone said.

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030618/media_nm/media_liberty_dc_1

Ashley

[vhsiv]

Did the Fat Lady just open her mouth?

Is that a half-note coming out of her mouth?
________
EroticaExotica (http://www.girlcamfriend.com/cam/EroticaExotica/)

[Digger]

OK, here's what I said in another thread. I'm cross-posting here because no one seems to be reading the other thread.
*********************
Now what I find interesting about this little blurb is this: (Warning!!! Digger's speculating again!!!) I have read as much about the Vivendi sale as I can find, and I do not recall ever seeing Liberty and Viacom linked in any way before. Now, this may just be speculation on the author's part, or it could be that there are some rumblings that Viacom and Liberty may do what I have always thought would be the most sensible thing and come to an agreement whereby one of these entities would purchase all of the assets and then sell off what they don't want to the other party. Because certain parties have interest in only pieces of VUE it would make sense from an economic standpoint. Certain assets would be more highly valued by certain interested parties, thus producing a higher bid for Vivendi than one interested party making a bid for everything when they only have a major interest in parts of the business. In that scenario everyone wins (including, hopefully, us).

[CosmicTheorist]

I've kind of been speculating along similar lines since December when Viacom first said they wanted Skiffy but not USA Network. Here's hoping you are right.

;)

[Dominar of Action]

Yes, but if that's the case, then John Malone better shut his mouth because any pre-arranged deal could blow the tax treatment they're looking for.

[AyuRocks]

Liberty Open to Joint-Bid for Vivendi Biz Assets
Thu Jun 19, 4:50 AM ET

By Georg Szalai

NEW YORK (Hollywood Reporter) - Liberty Media hopes it can come away with Vivendi Universal's entertainment assets and is open to teaming with other bidders -- particularly Viacom -- to succeed, chairman John Malone said during the company's annual shareholder meeting Wednesday.

While Liberty is "not explicitly working" with Viacom, in which it owns less than 1%, or any of the other four bidders at this point, Malone said "all bets are open" and he would "not rule out" any team efforts.

A Viacom spokeswoman declined comment, but sources have said various bidders for Vivendi Universal Entertainment (VUE), which owns theme parks, TV channels and Universal Pictures, have contacted others in an effort to potentially strike partnerships.

"Liberty has strong working relationships with several players, including Viacom, because they own a stake in them," Guzman & Co. analyst David Joyce said. "They could take advantage of that."

The cable pioneer, however, somewhat changed Liberty's tune on the possible role that USA Interactive (USAI) chairman Barry Diller could play in the runup to a Monday bidding deadline, saying Liberty is not cooperating with him on any part of its expected bid.

"At this time, we are on completely different trajectories," Malone said. A spokesman for Diller and USAI declined comment.

Liberty executives have recently hinted that they are uniquely positioned to strike a deal to take over VUE because Liberty owns about 20% of USAI and has a long-standing relationship with Diller, whose stake in Vivendi Universal could complicate any transaction.

Malone said Wednesday that he would rather try to optimize the VUE-USAI relationship if and when Liberty ends up winning VUE. While he didn't specify what this could mean, some observers suggested Malone could tap into Diller's expertise as former head of VUE by making him a close adviser.

Malone also said Liberty's Denver headquarters could add one or two senior executives if VUE joins the Liberty umbrella, but overall, Liberty would let division managers run operations without much interference.

He also reiterated recent comments about how Liberty does not want to jeopardize its credit ratings with a big takeover that would include big amounts of debt. Liberty will therefore "at least consider structures that would give us more flexibility," Malone said, hinting that the company could create separate entities or stocks for different parts of its business.

Asked by a shareholder whether Liberty, which owns about 3% of Vivendi Universal, would mind an initial public offering of VUE, Malone said he saw that scenario as second-best and as more likely to be "part of a bigger solution." Some observers have said a winning bidder could buy only a majority stake in VUE, leaving Vivendi Universal to unload the rest in an IPO.

Malone also fielded questions about home shopping cable network QVC on Wednesday, saying a decision about its future would likely come by the end of summer at the latest.

Minority investor Liberty can buy control of QVC after majority shareholder Comcast Corp. decides on a similar option first. The two sides have finished value appraisals for QVC, which must now be compared and independently verified if they diverge too much, according to Malone.

Malone hinted that Liberty could potentially acquire both QVC and VUE. The company has about $6 billion in cash and $10 billion-$11 billion in liquid investments, he said.

"Liberty is in very strong financial shape," Joyce said. "So they do have more flexibility than others."

Reuters/Hollywood Reporter

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030619/media_nm/industry_vivendi_liberty_dc_1

Ashley

[Digger]

I've kind of been speculating along similar lines since December when Viacom first said they wanted Skiffy but not USA Network. Here's hoping you are right.

It just makes sense to me. Malone gets the majority of VUE and Viacom gets skiffy. Vivendi gets a higher bid than it might otherwise get. There's no tax implications because technically the entirety of VUE is sold together (until Livberty turns around and sells skiffy to Viacom). Malone has said he doesn't want to debt finance the deal, so he gets Viacom to pay cash (probably around 2 Billion) for skiffy. Malone would do better with USA anyway because it has more of a broad appeal, whereas skiffy is much more of a niche network (despite what Bonnie may say) and Malone has no expertise in running a niche network whereas Viacom does.

[SabaceanBabe]

Malone has no expertise in running a niche network whereas Viacom does.

In spades.

This sounds very promising for us . .

[vhsiv]

Originally posted by Digger
Malone has no expertise in running a niche network whereas Viacom does. Au contraire, mes amis - 80% of the Starz/Encore group is niche. Look at their lineup:

http://www.starzsuperpak.com/homepage.html

Starz Mysteries
Starz Love Stories
Starz True Stories
Starz Westerns
Starz Family
Black Starz
Action!

And it's all premium cable, showing many films that are outside of the scope of Time-Warner-Viacom. Back in the days when Comcast DC actually offered a broad range of programming through their basic digital service, I was addicted to their Mysteries, True Stories and Action channels (except on Fri. nights). I think they even showed Roman Polanski's early film 'Repulsion (http://www.allmovie.com/cg/avg.dll?p=avg&sql=A40971)' (1965) one afternoon. The 14 or so niches that the Starz/Encore group services easily eclipses the 'variety' that all of the other cable outfits provide.
________
Halfbaked (http://half-baked.com)

[Dominar of Action]

There's no tax implications because technically the entirety of VUE is sold together (until Livberty turns around and sells skiffy to Viacom). Unfortunately, that's not exactly true. The IRS has been known to apply what's called the "step transaction doctrine" to ignore the technical, intermediary steps in a transaction and just focus on the beginning and the end and then treat it as if the most direct route was taken. This is particularly true if there is an agreement beforehand that the future steps will be taken.

In other words, if the *substance* of the deal is that Vivendi sells Skiffy to Viacom and the rest to Malone, the IRS could tax it that way, regardless of the technical form used.

[Digger]

I knew there was a reason I hated those tax accounting courses in College.

And why I did so poorly in them.