Liberty may fight Viacom for Universal Entertainment assets

kechara420 · 04-15-2003, 09:40 AM

These are two articles I came across today. URLs are included ...

http://www.nypost.com/business/73327.htm
A NEW CABLE WAR
By TIM ARANGO
April 14, 2003 --

Liberty Media's John Malone has zeroed in on Vivendi Universal's valuable cable channels as his next big acquisition, say sources close to Malone.

This could set up a bidding war between Malone and Viacom's Sumner Redstone, who is also said to have a strong interest in the two cable networks, USA and Sci-Fi.

One source close to both men said Redstone's interest in Vivendi's assets had waned in recent months, but became more serious after Malone's emergence as a serious bidder for the cable networks.

Malone may need the acquisition more, given that his company is close to running afoul of federal investment regulations, which would require that Liberty Media be regulated as a mutual fund if it doesn't soon purchase an operating stake in a large business.

A spokesman for Viacom said, "We've expressed interest, in general, in cable networks, and those channels have been mentioned as potential acquisitions."

A spokesperson for Liberty Media did not return a call seeking comment.

Liberty has passive stakes in a host of media companies, including AOL Time Warner and News Corp. It also owns half of Court TV, the Starz! premium movie channel and 42 percent of the home-shopping channel QVC, among other assets.

But to comply with the 1940 Investment Act - which requires that no more than 40 percent of a company's assets be shares in publicly traded companies - Malone must purchase a company he can operate. He considered bidding for DirecTV, but bowed out and instead backed News Corp.'s recent acquisition of the satellite TV company.

News Corp. also owns The Post.

Malone may yet bid for the rest of QVC that he doesn't already own, but one source close to him said his interest in operating the channel is lukewarm.

That leaves Vivendi Universal, which for months has been weighing a strategy to exit its U.S. entertainment assets, which include a movie studio, theme parks, a music division and TV properties. Vivendi is considering a variety of proposals, including selling the entire unit or breaking it up to sell pieces to various media companies.

Together, the two channels are valued at $5.5 billion to $6 billion, far less than the $11 billion Vivendi paid Barry Diller for the networks in 2001.

Both Viacom and Liberty Media have plenty of cash to do a deal, sources contend, but both are loath to be stuck with Vivendi's movie studio, which the company will likely insist on packaging with any deal for the cable channels.

"You'd think they'd want to sell the whole thing," said Michael Nathanson, an analyst at Bernstein who covers Vivendi, "because the studio is tough to sell on its own. Once you sell the cable channels, it gives you fewer options for selling the studio."

Sources say Viacom is likely to have more interest than Malone in operating the movie studio. "John has no interest in running a movie studio," a source close to Malone said.

Vivendi CEO Jean-Rene Fourtou recently told executives he hopes to make a decision on the future of the entertainment assets by the summer.

http://www.nytimes.com/2003/04/14/bu...ia/14MALO.html
April 14, 2003
Liberty Could Benefit From the DirecTV Deal
By GERALDINE FABRIKANT

In early March, Liberty Media's chief operating officer, Gary S. Howard, told investors at a conference that Liberty was considering a bid for DirecTV. The news surprised media industry executives. Liberty, which is controlled by John C. Malone, also owned 18 percent of the News Corporation. Rupert Murdoch, the chief of News Corporation, was angered by the news, according to a veteran media executive who knows both men (although a News Corporation spokesman disagreed with that interpretation). Mr. Murdoch has long wanted to acquire DirecTV and a rival bid from his largest shareholder was hardly helpful.

Associates persuaded Mr. Malone to back off. "John can get a little careless about relationships," this person said. "He just didn't think." Mr. Malone could not be reached for comment.

Liberty's decision to withdraw from the bidding was a wise move, analysts said. On Wednesday, the News Corporation announced a deal to acquire Direc TV, and Liberty, as News Corporation's largest shareholder, is likely to benefit on one hand. On the other hand, the same deal could potentially be bad news for Liberty's cable services. With the DirecTV purchase, the News Corporation has more leverage over cable programmers, noted Dennis Leibowitz, who runs ACT 11 Partners, a hedge fund that focuses on media companies. It could start new services and refuse to carry services for which there is less consumer demand. Liberty is eager to bolster its own leverage in the media world by buying up more programming holdings. The company has only two key investments in cable programming: 100 percent of Starz Encore, and 50 percent of Discovery Communications. But it is attempting to acquire Vivendi Universal's Sci-Fi Channel and USA Network as well as the company's film studio.

Viacom, too, is interested. But no company needs the assets quite as much as Liberty, which, aside from its cable networks, is a passive investor in dozens of media companies. If Liberty does not add businesses that it actually operates, the company could be vulnerable to higher taxes. The government would treat it as a type of mutual fund company. Although a Liberty spokesman said that the company is nowhere near violating those thresholds, some observers say that concerns about higher taxes are behind Mr. Malone's interest in acquiring cable services.

PrairieScaper · 04-15-2003, 11:54 AM

Hi, kechara420. Nice to see that you're coming out of lurkerdom to share this info.

However, you might want to check out the OT forum on network news and then look at the Campaign Strategizing forum, too. There are multiple threads on the Vivendi/Viacom sagas that you might be interested in. I believe the Americas forum is where Scapers find other Scapers in their area. Thus all of these threads with locations in the title.

Alot of folks might be interested in your info, but won't be checking this forum for it!

04-15-2003, 09:40 AM	#1
kechara420 Registered User Join Date: Sep 2002 Location: Gone to a new home ... Posts: 7,462	Liberty may fight Viacom for Universal Entertainment assets These are two articles I came across today. URLs are included ... http://www.nypost.com/business/73327.htm A NEW CABLE WAR By TIM ARANGO April 14, 2003 -- Liberty Media's John Malone has zeroed in on Vivendi Universal's valuable cable channels as his next big acquisition, say sources close to Malone. This could set up a bidding war between Malone and Viacom's Sumner Redstone, who is also said to have a strong interest in the two cable networks, USA and Sci-Fi. One source close to both men said Redstone's interest in Vivendi's assets had waned in recent months, but became more serious after Malone's emergence as a serious bidder for the cable networks. Malone may need the acquisition more, given that his company is close to running afoul of federal investment regulations, which would require that Liberty Media be regulated as a mutual fund if it doesn't soon purchase an operating stake in a large business. A spokesman for Viacom said, "We've expressed interest, in general, in cable networks, and those channels have been mentioned as potential acquisitions." A spokesperson for Liberty Media did not return a call seeking comment. Liberty has passive stakes in a host of media companies, including AOL Time Warner and News Corp. It also owns half of Court TV, the Starz! premium movie channel and 42 percent of the home-shopping channel QVC, among other assets. But to comply with the 1940 Investment Act - which requires that no more than 40 percent of a company's assets be shares in publicly traded companies - Malone must purchase a company he can operate. He considered bidding for DirecTV, but bowed out and instead backed News Corp.'s recent acquisition of the satellite TV company. News Corp. also owns The Post. Malone may yet bid for the rest of QVC that he doesn't already own, but one source close to him said his interest in operating the channel is lukewarm. That leaves Vivendi Universal, which for months has been weighing a strategy to exit its U.S. entertainment assets, which include a movie studio, theme parks, a music division and TV properties. Vivendi is considering a variety of proposals, including selling the entire unit or breaking it up to sell pieces to various media companies. Together, the two channels are valued at $5.5 billion to $6 billion, far less than the $11 billion Vivendi paid Barry Diller for the networks in 2001. Both Viacom and Liberty Media have plenty of cash to do a deal, sources contend, but both are loath to be stuck with Vivendi's movie studio, which the company will likely insist on packaging with any deal for the cable channels. "You'd think they'd want to sell the whole thing," said Michael Nathanson, an analyst at Bernstein who covers Vivendi, "because the studio is tough to sell on its own. Once you sell the cable channels, it gives you fewer options for selling the studio." Sources say Viacom is likely to have more interest than Malone in operating the movie studio. "John has no interest in running a movie studio," a source close to Malone said. Vivendi CEO Jean-Rene Fourtou recently told executives he hopes to make a decision on the future of the entertainment assets by the summer. http://www.nytimes.com/2003/04/14/bu...ia/14MALO.html April 14, 2003 Liberty Could Benefit From the DirecTV Deal By GERALDINE FABRIKANT In early March, Liberty Media's chief operating officer, Gary S. Howard, told investors at a conference that Liberty was considering a bid for DirecTV. The news surprised media industry executives. Liberty, which is controlled by John C. Malone, also owned 18 percent of the News Corporation. Rupert Murdoch, the chief of News Corporation, was angered by the news, according to a veteran media executive who knows both men (although a News Corporation spokesman disagreed with that interpretation). Mr. Murdoch has long wanted to acquire DirecTV and a rival bid from his largest shareholder was hardly helpful. Associates persuaded Mr. Malone to back off. "John can get a little careless about relationships," this person said. "He just didn't think." Mr. Malone could not be reached for comment. Liberty's decision to withdraw from the bidding was a wise move, analysts said. On Wednesday, the News Corporation announced a deal to acquire Direc TV, and Liberty, as News Corporation's largest shareholder, is likely to benefit on one hand. On the other hand, the same deal could potentially be bad news for Liberty's cable services. With the DirecTV purchase, the News Corporation has more leverage over cable programmers, noted Dennis Leibowitz, who runs ACT 11 Partners, a hedge fund that focuses on media companies. It could start new services and refuse to carry services for which there is less consumer demand. Liberty is eager to bolster its own leverage in the media world by buying up more programming holdings. The company has only two key investments in cable programming: 100 percent of Starz Encore, and 50 percent of Discovery Communications. But it is attempting to acquire Vivendi Universal's Sci-Fi Channel and USA Network as well as the company's film studio. Viacom, too, is interested. But no company needs the assets quite as much as Liberty, which, aside from its cable networks, is a passive investor in dozens of media companies. If Liberty does not add businesses that it actually operates, the company could be vulnerable to higher taxes. The government would treat it as a type of mutual fund company. Although a Liberty spokesman said that the company is nowhere near violating those thresholds, some observers say that concerns about higher taxes are behind Mr. Malone's interest in acquiring cable services. __________________ Gone to another home ...

Thread Tools	Search this Thread
Show Printable Version Email this Page	Search this Thread: Advanced Search
Rate This Thread
Rate This Thread:

04-15-2003, 11:54 AM	#2
PrairieScaper occasional visitor Join Date: Sep 2002 Location: Oh Hezmana, it's Kansas! Posts: 1,173	Hi, kechara420. Nice to see that you're coming out of lurkerdom to share this info. However, you might want to check out the OT forum on network news and then look at the Campaign Strategizing forum, too. There are multiple threads on the Vivendi/Viacom sagas that you might be interested in. I believe the Americas forum is where Scapers find other Scapers in their area. Thus all of these threads with locations in the title. Alot of folks might be interested in your info, but won't be checking this forum for it!