Barry Diller's resignation as chairman of Vivendi Universal Entertainment is aimed much more at the deal he's actually doing—the takeover of travel Web site Expedia—than the deal everyone thinks he's doing—the $20 billion or so takeover of VUE.
Diller said he's not chasing VUE's entertainment assets. If the company Diller runs and controls, USA Interactive, didn't have a $2 billion stake in VUE, he contends, he would have zero interest in that auction process, dismissing the contention of pretty much everyone who knows him that he has "desperate yearnings" to be control a studio and TV portfolio.
"They're talking to many people," Diller told securities analysts and reporters. "We have made no proposal. We have no intention of actually, so to speak, making a proposal. We want to see what this process brings back to them. Then, if somebody calls us up and tells us, well, they'd like us to consider this or that, then we'll address that at the time."
Diller's resignation from VUE came as he finally landed a deal to buy the 46% of Expedia his USAI doesn't own. USAI, of which Diller is chairman and CEO, bought Microsoft's controlling stake a year ago for $1.5 billion but failed in an attempt to buy out Expedia's public shareholders. Now, however, Diller is offering $3 billion worth of USAI's stock in a deal that values Expedia shares at 30% more than their trading price.
Diller's resignation calms investor anxiety over his odd role as head of two separate companies, one of them merely a division of a larger company, Vivendi Universal.
The dual posts stem from USAI's sale of USA Network and Sci Fi Channel to major shareholder Vivendi Universal last spring. When owned by Seagram, Universal had put the networks in Diller's hands to run but owned 43% of USAI. When Diller handed the networks back to Vivendi Universal, the company gave up that USAI stock and gave USAI—and Diller personally—minority stakes in Universal's entertainment division.
USAI investors questioned his loyalty to the Internet travel and cable shopping company because he has been angling for an entertainment empire ever since he left News Corp.'s Fox more than a decade ago.
If nothing else, VUE has been a distraction from his day job. Diller was deep enough into the entertainment unit's management that VUE's top executives "speak to him every day," said one industry executive.
Diller was dismissive "We are not going into nor am I as chief executive going into the entertainment business in that kind of capacity or role." However, since USAI has $2 billion worth of common and preferred stock in VUE, Diller wouldn't rule out a takeover of the unit if that is what would maximize the value of that investment.
"If we didn't have the stake in VUE that we have," said Diller, "we would have utterly no ambitions in this area."