Viacom to shed USA, Sci-Fi
|
More Articles:
Most Viewed:
'Transformers,' 'Ice Age' neck and neck(1473 views)Bruno(931 views)'Transformers,' 'Ice Age' battle for top(857 views)Plan for Jackson service unveiled(562 views)Bambi vs. Godzilla(479 views)Big bucks for 'Transformers' at foreign B.O.(315 views) |
Viacom and Seagram confirmed a report in Wednesday's Wall Street Journal that the two sides had resumed talks to settle the litigation over the USA Network but the companies declined to elaborate on the details.
It is understood, however, that only a few minor points need to be resolved. Sources cautioned, however, that the deal could still break down.
The agreement is likely to win Viacom some support on Wall Street, where the company has lately been under pressure over problems with its Blockbuster video rental unit. Viacom's sale will be taxable but the company is expected to use the after-tax proceeds to pay down debt.
As part of the deal, Viacom's Paramount Pictures has won the right to continue supplying telepics to USA.
News of the settlement talks comes shortly before Delaware Chancery Court vice chancellor Myron Steele was due to rule on how the ownership should be restructured. After a six-week trial last fall, Steele ruled in May that Viacom was in breach of the USA Network partnership agreement because of the entertainment conglomerate's ownership of the MTV Networks.
Work out solution
In his ruling, Steele asked both sides to work out a solution to the ownership dispute, but in talks in late May the two companies could not agree on a deal. Both filed separate proposals for resolving the dispute, prompting Steele to warn earlier in the summer that he would order his own solution some time this month.
As the tenor of his ruling was against Viacom, that company may have been prompted to give ground during the settlement talks to avoid an adverse ruling. Sources noted, however, that Steele's ruling was likely to be appealed by either side and no resolution was likely any time soon.
Sources say Steele has been informed about the settlement talks and has put plans to rule on hold. Steele's office declined to comment, but said Steele had not scheduled the issue of a ruling.
Viacom stock closed down 75¢ to $32.87 Thursday while Seagram stock fell 25¢ to $34.06.
