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From www.globeandmail.com
Bronfman's hunt for Vivendi assets is 'all about image'
By_BRIAN MILNER Monday, May 26, 2003 - Page B2 When asked if Edgar Bronfman Jr. is capable of mounting a serious bid to reacquire the entertainment assets of Vivendi Universal, the veteran Hollywood player couldn't help laughing. "There isn't anybody who is a serious player who is going to give Edgar $15-billion [U.S.] and let him run that show," said the knowledgeable source, whom we'll call Deep Guffaw. He also laughed at the prospect that Mr. Bronfman was somehow seeking redemption for the disastrous deal that put those very assets in Vivendi's hands in the first place and ultimately destroyed a considerable chunk of one of the world's great family fortunes. "This is designed to make Edgar more viable in the set that he travels in," said Deep Guffaw, who travels in some of the same circles. "Announcing that you're a player with no backing doesn't get you anywhere on Wall Street. But it does make you a player again with the people you have lunch with at the [Four Seasons] Grill Room. For Edgar, it's all about image now." Mr. Bronfman went public last week with the dramatic news that he was lining up financial and strategic partners to join the bidding for the Universal part of Vivendi. This was the first clue that this exercise may be more about appearance than business. Mr. Bronfman is normally a secretive type who prefers not to discuss his investment plans in the media. Yet there he was, granting interviews to carefully selected newspapers and relying on his veteran spinmeister to get the word out to others that he is indeed deadly serious and that he expects to be in charge when the deal's done. "I would not be pursuing this if we did not have a serious chance of winning," he told the august Financial Times. He said his family would be putting cash into the deal but would not say how much. By family, he generally means himself and his doting father, Edgar M. Bronfman. Most of the other Bronfmans want nothing more to do with his ventures after the bath they have taken since selling the family's fabled Seagram empire to Vivendi and its hugely ambitious chief, Jean-Marie Messier, in an all-stock deal in December, 2000. Even if he kicks in his family's remaining small stake in Vivendi Universal, he would still have to come up with billions in debt or equity financing. By now the story of how Mr. Messier's schemes drove Vivendi Universal to the brink of oblivion is well known -- as is Mr. Bronfman's key role in the board revolt that led to his ouster last year. Jean-René Fourtou, the veteran French executive who was brought in to salvage the company, has no choice but to sell the entertainment holdings to meet his goal of eliminating more than $18-billion worth of debt by the end of this year. His intention is to auction Vivendi Universal Entertainment (VUE), which includes the Hollywood movie studio, television arm, U.S. cable channels and theme parks, to a single bidding group, likely by this summer. But he wants to retain the huge music division, which Mr. Bronfman covets. The Bronfman camp says Merrill Lynch is on board as an adviser and Cablevision Systems, a major New York area cable company, could end up as a strategic partner, contributing its cable channels to the mix in exchange for equity. Intriguingly, Cablevision is run by Jim Dolan, the spotlight-loving son of the company's founder, who has presided over a sharp decline in its fortunes. Its less-than-stellar investments include the hapless New York Rangers hockey team. For past corporate efforts, both Messrs. Dolan and Bronfman had the dubious distinction of making Business Week's list of the 20 worst managers of 2002. This prompted the following New York Post headline last week on their proposed joint bid: "Call 'em dumb and dumber." Other potential buyers with better track records and deeper pockets include Viacom's Sumner Redstone, General Electric's NBC, Metro-Goldwyn-Mayer, retired oilman Marvin Davis and the potent combination of Liberty Media boss John Malone and Barry Diller, briefly the chairman of VUE and a darling of Wall Street for his money-making acumen. A Malone-Diller combination is regarded as having the inside track. Mr. Malone is a much bigger Vivendi shareholder than the Bronfmans. Mr. Diller has the right to veto major changes in the entertainment arm, one of his demands when he folded his company's cable, TV and movie assets into Vivendi Universal last year. And both have filed sizable lawsuits against the company that would likely have to be resolved as part of any deal. Whether Mr. Bronfman's proposed bid is more about social standing than reality or is actually a shrewd move to light a fire under an ineptly handled auction process that has so far gone nowhere remains to be seen. But this much is likely. Sometime this summer, Mr. Fourtou and his Bronfman-less board (both Edgar Jr. and his father have stepped aside until the matter is settled) will likely pick a suitor at a lower price than the company wants. What then emerges could be much like the old Vivendi, a largely debt-free utility, with a lucrative telephone business replacing water as a rich source of cash. That could prove a far better deal for the Bronfmans than a debt-laden effort to reacquire a bunch of entertainment assets most of the family never wanted in the first place. |
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BST |
It certainly seems that Mr Diller isn't out of the fight yet, which could be bad news for us, as he was the one who hired Hammer.
Peter :( |
Peter,
Are you feeling OK? You look a little GREEN. :) |
No, I'm definitely in the PINK!
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Two articles relating to Vivendi
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The "shedding" at Vivendi goes on...
as another property is sold:
http://money.excite.com/jsp/nw/nwdt_...&date=20030602 Although this particular property does not directly play into BSG, it's sale and others can be viewed as a prelude to the big kahuna! (Ann.....tiss.....uh.....pay......shun).... BST :) |
Here's the article:
NEW YORK (Reuters) - An investor group led by the privately held Gordon Brothers Group LLC and Palladin Capital Group Inc. on Monday said it had purchased specialty gift shop Spencer Gifts LLC from Vivendi Universal Entertainment for an undisclosed amount. Gordon Brothers, a Boston-based retail finance and asset management company, and Palladin, a New York-based merchant bank, said they have hired Steven Silverstein, the former president of Linens 'n Things, to head the chain, which is based in Egg Township, New Jersey. The transaction comes amid a larger effort by Vivendi Universal (V) (EAUG), the debt-laden media and entertainment conglomerate, to raise cash by shedding assets in the United States. Spencer boasts more than 700 specialty gift and Halloween shops in the United States, Canada and the United Kingdom, and generates about $400 million in annual revenue. ©2003 Reuters Limited. |
Vivendi Universal Vows Assets Won't Go Cheap
Tue Jun 3,10:24 PM ET Add Entertainment - Reuters Industry to My Yahoo! By Georg Szalai NEW YORK (Hollywood Reporter) - Vivendi Universal is happy with the level of interest in its entertainment assets but will not sell them at fire-sale prices after having strengthened its financial profile in recent months, chief financial officer Jacques Espinasse said here Tuesday. In what some observers described as a warning to potential acquirers not to submit low-ball bids, Espinasse said the company is keeping open the option of a spinoff of its Vivendi Universal Entertainment operation in an initial public offering should the conglomerate fail to receive satisfying offers. The executive spoke at the Deutsche Bank Securities Media Conference just as the divestiture process is moving into its final phase. Saying Vivendi already has wrapped up about $9 billion of a planned $16 billion in asset sales, the executive said the company has strengthened its balance sheet enough to hold out for a good offer. "Cash is not our problem anymore," he said. "We are -- as you say in America -- over the hump." He went on to describe the expression of interest from the different parties as "quite strong." As a result, Vivendi now has the time, the organized process and the competition among bidders that is necessary to fetch a "a very good price" for its entertainment properties, Espinasse said. Vivendi this week is scheduled to wrap up its management presentations to potential bidders for its film, TV, music and theme park businesses. Interested parties include Viacom Inc., NBC, John Malone's Liberty Media, oil billionaire Marvin Davis and a consortium led by Edgar Bronfman Jr. The potential bidders have been mum in recent days as they further evaluate Vivendi's businesses and their options. Sources familiar with the situation said Bronfman has in recent days continued discussions with private equity firms to join him, Cablevision Systems and financial services firms Wachovia Securities and Merrill Lynch in a broad-based bid for Vivendi Uni's entertainment assets. Davis and Bronfman have expressed an interest in Vivendi Universal Entertainment (VEU) and the separately organized Universal Music Group, while Liberty has focused its interest on VUE. Viacom and NBC, meanwhile, are looking to acquire Vivendi's TV operations, which include cable TV networks Sci Fi and the USA Network. Bidders also differ in their interest in Vivendi's theme park and video game units, Espinasse said Tuesday. Overall, the executive echoed that not only do different players have different interests, but that different deals would also have different tax and regulatory implications, which Vivendi Uni will take into account when weighing bids. Espinasse also said investors have sometimes overemphasized the tax liabilities given that they are negligible if Vivendi Uni plays its cards right. "If we do it in a stupid way, that is true," he said when asked about a $2 billion tax obligation that could be triggered by a VUE sale. "But if we do it smartly, it is completely wrong." For example, he reiterated that certain scenarios, previously described by sources, can circumvent tax payments, particularly an outright sale of VUE in its entirety. This scenario could even be followed for the short term to pull off a smaller transaction without negative effects, Espinasse said. "If we sell to someone interested in just the TV assets, we could (sell them all of VUE and then) buy back the theme parks and studios," he explained, indirectly confirming a scenario that Wall Street observers have been discussing. Espinasse also once again rejected a claim by USA Interactive and its CEO, Barry Diller, former head of VUE, that Vivendi Uni must pay them as much as $620 million in tax obligations. Describing the claims as a negotiation tool in the current sales process, Espinasse said: "We have quite the ability to resist, and so we are resisting." He also said a $400 million tax obligation can be triggered if Vivendi Uni sells all of VUE and UMG at the same time before Dec. 31, 2005, based on the merger agreement between Vivendi Uni and Seagram, formerly led by Bronfman. While Vivendi management has previously never commented on this tax issue, Espinasse hinted Tuesday that a sale of both assets to the same bidder could simply be completed with a time delay. Similarly, Vivendi Uni could hang on to UMG for another year and a half, he said. Wall Street observers have suggested that Bronfman could offer to take care of these tax liabilities if he wins the bidding war. Vivendi management, meanwhile, has been positively surprised by the entertainment assets' operating momentum at a time of divestiture talks, Espinasse said in plugging the conglomerate's financial performance. For example, recent film release "Bruce Almighty" has already taken in more than twice the boxoffice receipts that Vivendi Uni had budgeted, he explained. Vivendi shares have performed strongly since chairman and CEO Jean-Rene Fourtou publicly admitted last month that he was looking to sell the entertainment operations. Investors and analysts seem to be satisfied with the way Vivendi Uni has moved ahead and managed the sales process. In Paris trading, shares of Vivendi Uni fell 0.5% on Tuesday to 15.85. American depositary shares fell 0.2% to 18.56. |
Today's news from the Viacom front:
http://money.excite.com/jsp/nw/nwdt_...&date=20030604 Realistic, since regulators would 'probably' disallow Viacom from owning 2 major studio companies. Question is whether Vivendi would want to sell VUE piecemeal. |
USA to Buy Warrants from Vivendi
Fri June 6, 2003 07:32 PM ET SAN FRANCISCO (Reuters) - French media conglomerate Vivendi Universal V.N will sell 20 percent of its stock in USA Interactive USAI.O back to the Internet conglomerate, USA said on Friday. The deal, which will be accomplished through the sale of warrants to purchase 16 million shares of USA common stock, will mark another step toward untangling the complex partnership between the two companies, as Vivendi looks to shed its media assets and raise cash. Under terms of the deal, after the warrant sale is completed Vivendi will be free to sell its interest in USA without the consent of chief executive Barry Diller or cable mogul John Malone's Liberty Corp. L.N . USA still would maintain its preferred shares in Vivendi Universal Entertainment, its partnership with Vivendi which holds the Universal film studios, USA cable network and Universal Music and its claim on a related $2 billion letter of credit in the event of any asset sale. New York-based USA Interactive, whose Internet properties include Expedia, Ticketmaster and Hotels.com, said that it would pay a total of $407.4 million to buy warrants to acquire some 16 million shares, at exercise prices of $32.50 per share and $37.50 per share. USA Interactive shares closed at $37.17 Friday on Nasdaq, down $1.34 on the day. A spokesman for the company had no further comment. After the warrant sale, French media giant Vivendi will continue to hold, directly or through its affiliates, 56.6 million shares of USA common stock. Vivendi has come under increased pressure to raise cash and slash debt by selling assets. The company received the USA warrants last year as part of its deal to buy the cable networks USA and Sci Fi, which are now part of Vivendi Universal Entertainment.. And in April, USA Interactive sued Vivendi for $620 million over a tax dispute, and said in a related securities filing that it could block Vivendi from selling some assets if it did not get a letter of credit to protect its stake in their partnership. USA has said that when Vivendi sells Vivendi Universal Entertainment, it would have to provide USA with a letter of credit for about $2 billion and further tax-related payments if the sale included the cable properties that USA had originally contributed to the partnership. Barry Diller stepped down as chairman of Vivendi Universal Entertainment in March. Diller said in May that he intended to use his stake in VUE as a vehicle to fund acquisitions, invest in existing business, or improve USA Interactive's balance sheet within the next six to 12 months. Liberty Media Chairman John Malone also said last month that his company was interested in buying Vivendi's U.S. entertainment assets, but stopped short of saying it would make a bid. What does all the above mean exactly? Peter |
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Peter, My own "view" of this transaction is that Vivendi is taking steps to allow themselves Maximum Flexibility for the eventual sale of VUE. Vivendi is basically selling 20% of their investment in USA Interactive back to USA-I (& Diller). According to a previous agreement between the two companies, this will allow Vivendi to "dispose" of the remaining 80% of their investment in USA Interactive to whomever they choose, without the approval of USA-I. This would allow them to possibly fetch a higher price for that stake, on the open market, than they would get if they sold them back to USA-I, which would also be an option for Vivendi. It all boils down to Vivendi raising cold hard cash and at the same time getting maximum value for their properties without having something akin to a "fire sale". At the same time, it also provides them the opportunity to remove a potential obstacle to their disposal of VUE. Hope this helps. BST :) P.S. Methinks the time is getting close for the "V" being removed from "VUE". Just a hunch. |
BST has it just about right, Vivendi is take one more step in untangling the financial rats nest Diller helped to create.
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Thanks BST!
Regards, Peter |
The Latest
The picture is starting to come into focus a bit as it seems that one potential suitor has removed himself from the running, for VUE:
In addition, Mr. Diller's broad standstill obligations under the Stockholders Agreement, including his obligation not to acquire Vivendi Universal or any of its subsidiaries, will continue to apply in accordance with the Stockholders Agreement. For the entire article, please check the link: http://money.excite.com/jsp/nw/nwdt_...&date=20030610 BST |
So this means that Diller's out of the running?
Cool. No big time friend for Bonnie to lean on anymore once new owners take over her channel. |
I have pieced this together base on information available and past history.
If you have better information I will add it to this. Time line: Early June Advertising contracts for Fall/Winter season are signed. Funding is locked in thru the end of the year. June, 2003 Filming of mini completed. Post production starts. July, 2003 Every one takes a break for the holidays. Mid August Post production continues. Buyer selected for Universal – formal announcement made soon after. September, 2003 Vivendi Board meeting approves sale of Universal. Transfer of ownership planning begins. Editing of min continues. Tempo of advertising the mini increases. :( Dec 3 Mini airs. :( Jan 2, 2004 New owners of Universal take over. Internal reviews and reorganizations begin. Initial discussions of possible series, based on the mini, begin. |
Bronfman Gathers More Investors for Vivendi Bid
NEW YORK (Reuters) - A group of private equity players has joined a consortium formed by Edgar Bronfman Jr. to bid for the U.S. entertainment assets of Vivendi Universal, people familiar with the matter said on Thursday.
Bronfman, who lost a big portion of his family's Seagram distilling fortune betting on Vivendi Universal, has had talks with several potential investors and has recruited Boston-based private equity firm Thomas H. Lee to buy back the media and music empire his family once owned, the sources said. One of the sources said Bronfman has also lined up private equity shop Blackstone to join the group, which includes a syndicate led by Wachovia Corp. Bronfman joins several suitors interested in all or parts of the entertainment assets, which include cable TV networks, Universal Studios and theme parks. Other suitors include oilman Marvin Davis, Viacom Inc., Liberty Media Corp. and Metro-Goldwyn-Mayer. Spokesmen for Bronfman and Thomas H. Lee had no comment. A spokesman for Blackstone was not immediately available. Bronfman sold the Universal entertainment empire to Vivendi for $34 billion in stock three years ago, when the French company was transforming itself from a water utility to a global media and entertainment giant. The deal subsequently cost Bronfman's family hundreds of millions of dollars as Vivendi's stock plummeted. BRONFMAN ALSO EYES MUSIC, GAMES With the additional funding, Bronfman hopes to have enough financing to make a bid for Vivendi's entertainment assets, as well as the music group, which has not yet been put up for sale. Others may still join the consortium, possibly taking on some Vivendi debt, one of the sources said. The New York Times reported on Thursday that Blackstone and Thomas H. Lee had joined Bronfman. The group assembled so far has had due diligence meetings that will continue this week and next and is prepared to make a bid when Vivendi sets the timetable, the source said. Vivendi's video and online games division has already drawn bidders and a deal, worth as much as $800 million, is expected to be completed as early as this summer. Bronfman would also be interested in the unit if it were made part of the U.S. entertainment assets, the source said. Several suitors have emerged for all or pieces of Vivendi's entertainment group as the company sheds assets to pare debt. Oilman Davis, who is interested in all of the assets, has bid about $15 billion and offered to take on $5 billion of Vivendi debt. MGM has also contacted various media players to join it for a bid, sources familiar with the situation said. MGM officials were not immediately available to comment. Viacom and Liberty Media have said they are interested in Vivendi's cable networks, such as Sci-Fi and USA. A source close to Viacom said the company plans to pursue any bid it would make alone. |
Kerkorian said to mull bid for Vivendi Universal units
By Bloomberg News, 6/13/2003 OS ANGELES -- Billionaire Kirk Kerkorian is examining the books of Vivendi Universal SA's US entertainment businesses, preparing to bid against Edgar Bronfman Jr., Marvin Davis, and John Malone. Paris-based Vivendi will accept offers for the assets by the end of this month, said three people who asked not to be named. Metro-Goldwyn-Mayer Inc., 67 percent owned by Kerkorian, hired Rothschild to advise on a bid, the people said. Bronfman and Malone's Liberty Media Corp. have said they plan to bid on Vivendi Universal Entertainment, as has Davis. Vivendi is selling the assets, which include theme parks and Universal Studios, to cut debt that ballooned when former chief executive Jean-Marie Messier turned the water utility into a media company to rival AOL Time Warner Inc. Current chief executive Jean-Rene Fourtou has said he plans to sell 16 billion euros ($18.8 billion) of assets by the end of 2004. ''The list of bidders that can buy the entire unit -- the studios, the TV networks, the theme parks -- is pretty thin,'' said Michael Nathanson, a New York analyst with Sanford C. Bernstein who rates Vivendi ''market perform'' and doesn't own any shares. Vivendi wants ''some closure,'' he said. The company had 12.3 billion euros of debt on Dec. 31. Davis plans to bid for the studios and parks, and for Universal Music, people familiar with the plan said this week. Davis in November planned to offer about $20 billion for the units, people familiar with the bid said then. Allan Mayer, a spokesman for Davis, declined to comment. Fourtou, a former drug company executive who took over at Vivendi a year ago when Messier was fired, told investors in April that the company has no plans for the moment to sell Universal's music unit, which is a separate division from Vivendi Universal Entertainment. Other bidders for the assets, which include the USA cable television network and the TV producer of ''Law & Order,'' may include Viacom Inc., the number three US media company, and General Electric Co.'s NBC television unit. Vivendi plans to narrow the field to one or two candidates in July and to complete the sale by the end of the year, a person familiar with the transaction said. Vivendi opened the books to potential bidders, including MGM, earlier this month, another person said. A bid by Santa Monica, Calif.-based MGM depends on what it finds during due diligence, the person said. MGM spokeswoman Lea Porteneuve and spokesman Joe Fitzgerald both declined to comment. Telephone messages left at the office of Terry Christensen, a spokesman and attorney for Kerkorian's Las Vegas-based Tracinda Corp., weren't returned. Kerkorian, ranked 97th on the Forbes 2003 list of the world's richest people, has an estimated net worth of $3.4 billion. In addition to MGM, Kerkorian's Tracinda is also the largest holder of the Las Vegas casino company MGM Mirage. He's the second-largest holder of DaimlerChrysler AG, the number three US automaker. This is the third time Kerkorian, 86, has controlled the MGM studios. He first bought the rights to United Artists, a company that distributed MGM films, in 1981. ''They want to wrap things up before they go on summer holiday,'' Nathanson said of the Vivendi executives. ''This has gone on long enough.'' Vivendi spokeswoman Anita Larsen declined to comment on the timing of the sale. This story ran on page E2 of the Boston Globe on 6/13/2003. © Copyright 2003 Globe Newspaper Company. |
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