While U.S. media moguls courting Vivendi Universal are lusting for a passionate tango, the French company continues to stage a slow, frustrating pas de six.
Vivendi has made little outward progress in the auction of its U.S. entertainment properties in the three weeks since its board reviewed bids for Vivendi Universal Entertainment and immediately rejected just one player, oil billionaire Marvin Davis. Since then, the process has been a series of meetings and gradual exchange of data, not the kind of shootout some of the U.S. cowboys are accustomed to.
"Everybody submitted bids a month ago, and they've eliminated one guy," said an executive at one of the bidders. "Damn."
An executive with another bidder sees no sign that things will speed up. "They've set a series of meetings in the next two weeks. They're having discussions of the value of the different offers, contract markups. This is a tedious thing when you're doing it with one party, but they're doing it with more."
Bids for Universal's movie studio, theme parks and USA Networks unit were submitted June 23, valuing the operation at $11 billion-$12 billion.
The most intensive discussions, not surprisingly, are with the three companies that actually submitted bids: Liberty Media, an investor group led by Vivendi board member and former Seagram CEO Edgar Bronfman Jr., and MGM Studios. General Electric's NBC is said to still be interested in forming some sort of a partnership with VUE, so the broadcast network could get its hands on cable's USA and Sci Fi channels.
MGM has grown frustrated enough to demand that Vivendi speed up the due-diligence process, particularly by delivering more detailed data on its operations faster. The studio sent Vivendi a letter raising its offer to $11.5 billion, conditioned on receiving more complete information by this week.
Vivendi rejected the demand. But industry executives disputed reports that the company also dismissed MGM completely. The executives said the French company's bankers are still sending MGM some data.
But players on other sides of the deal see MGM as the weakest bidder. "Vivendi is willing to carry a piece of the action, so money isn't the only thing here," said an admittedly biased executive with one of the other suitors. "You have [Liberty Chairman] John Malone or [NBC Chairman] Bob Wright managing your interests; you're going to pick MGM?"
Liberty and Bronfman have to rework their bids because they had initially offered to buy Vivendi's ailing Universal Music record division. But that's a troubled company in a troubled sector that none of the suitors is eager to acquire. Vivendi's bankers figure that the absence of excitement is depressing the price that bidders put on the other assets, particularly the highly coveted USA and Sci Fi. So Vivendi decided to keep Universal Music, attempt to turn it around itself and probably sell it later.
No deadlines have been set for a second round of bids.
Malone is seen as the leading bidder because, unlike GE, Liberty actually submitted the kind of bid Vivendi had sought, a mixture of cash and assumed debt plus stock that would give Vivendi a carried interest. Liberty's stock is more widely traded than, say, MGM's, which has a smaller market capitalization and, hence, is a less attractive currency when taking it in billion-dollar chunks.