Hey, That's Slow Bidness!
Suitors don't find everything about Vivendi assets appealing
By John M. Higgins -- Broadcasting & Cable, 6/30/2003
No bid? No problem, we still want you. That's basically the response of Vivendi Universal Entertainment (VUE), whose bankers sought to keep all six suitors involved in the auction of its U.S. entertainment properties, even though two of them—Viacom and NBC parent General Electric—didn't actually submit the kind of eBay-like bids the French company sought.
Vivendi's board of directors is scheduled to meet in Paris Tuesday to review the slate of offers and decide how to proceed. Insiders cautioned that the meeting will probably result only in a round of revised offers, not any conclusion of the auction.
GE sent a letter expressing interest in a merger or joint venture without specifying terms. Viacom didn't even go that far, simply relying on past declarations that it wants Vivendi's cable operations, USA Network and Sci Fi Channel, but not its movie or music operations. Vivendi could have read that in the paper three weeks ago.
John Malone's Liberty Media, MGM, a group led by Seagram heir Edgar Bronfman Jr. and another led by oilman Marvin Davis all submitted detailed bids for the bulk of Vivendi Universal Entertainment. Industry executives said the value ranged from MGM's $9 billion in cash and assumed debt for the cable networks and Universal Studio operations to around $15 billion from Liberty, Bronfman and Davis, whose bids included the ailing Universal Music record company, a business no one really wants.
That's pretty much in the range that Vivendi executives had sought. Vivendi CFO Jacques Espinasse indicated two weeks ago that the company was expecting bids of at least $14 billion.
By week's end, though, Vivendi's bankers were back to NBC Chairman Bob Wright at NBC and Mel Karmazin at Viacom, looking to keep them in the fold. Viacom expressed willingness to buy TV-production arm USA Studios but continued to balk at buying Universal Studio. Viacom already owns Paramount, and would probably face substantial antitrust issues if it tried to buy another studio.
It wasn't clear whether Vivendi was disappointed in the cash offers or was merely seeking to keep Liberty, Bronfman and Davis on their toes.
"They seem pleased with the process," said Sanford Bernstein media analyst Michael Nathanson. As the markets have improved and Vivendi has made progress toward paring the debt amassed by ousted CEO Jean-Marie Messier's takeover binge, Chairman René Fourtou has grown more interested in hanging on to a minority piece of VUE. "The proposition is not just about price; it's about value," said Nathanson.
"These are solid content assets. We're looking at them, and we have the benefit of knowing we are their preferred partner," said a GE source.
By "preferred partner," the source was referring to the highly popular Law & Order franchise that Dick Wolf and the Universal TV studio produces for NBC.
"The question [Vivendi executives] have to answer is whether they want to maximize the long-term value of those assets or cash out," the source said. "If they sell to a financial buyer, they will obviously have to leave a lot of value on the table. You don't get to maximize value when you deal with private-equity players. We've made it clear we think this would be a fantastic strategic venture, which they don't disagree with."
