Liberty suit would unwind USA deal

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By suing Vivendi Universal for fraud, Liberty Media Corp. is signaling that it's
being thwarted in attempts to buy the French company's entertainment assets.

The Liberty lawsuit stems from a stock swap that was part of last year's $11
billion deal combining Universal's movie and TV studios with USA Interactive's
cable networks, USA Network and Sci Fi Channel.

Liberty exchanged its stake in USA for 3.6 percent of Vivendi Universal's
equity.

The French company's stock has tanked amid a financial scandal.

"Liberty management has publicly stated its interest in acquiring Vivendi's
U.S. television assets," Merrill Lynch & Co. Inc. media analyst Jessica Reif Cohen said.
"To state the obvious, this lawsuit suggests that negotiations between Liberty
and Vivendi have not been fruitful."

Vivendi dismissed it as a "negotiating tactic."

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