USA loves U merger
Diller moves closer to helm with approval
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About 87% of USA shareholders --- excluding Diller, Vivendi and Liberty Media -- greenlighted the cash and stock deal, worth $10.3 billion when it was announced last December. The combo of USA and Sci Fi cable nets, USA Film and other assets reverses former Seagram topper Edgar Bronfman, Jr.'s controversial sale of U's TV biz to Diller in 1998.
It creates a new entity called Vivendi Universal Entertainment, owned 93% by Vivendi, 5.4% by USA Networks and 1.5% by Diller himself.
The deal is expected to close next month after Vivendi finalizes a credit facility for the $1.6 billion in cash it agreed to pay USA Nets' shareholders.
No time limit to meeting
Vivendi stockholders are not required to approve the arrangement but are likely to weigh in on that and many other matters when they gather today at the conglom's annual meeting in Paris. Security will be high and protests massive as French unions, media and film communities stew over chairman Jean-Marie Messier's firing last week of Canal Plus chief Pierre Lescure.
France, unlike the U.S., has no time limit for shareholder Q&A with execs at these events. That means the meeting, which starts at 5 p.m. local time, is likely to drag on until late in the evening.
Even before l'affaire Lescure, faith in Messier's strategic vision and management skills had plummeted along with the conglom's stock price.
The shares rebounded for several days after Lescure's ouster but eased 1.21% Tuesday to close at $34.40. Shares of USA dropped 3.64% to $30.43.
Diller poised
Messier's troubles are likely to strengthen Diller's hand as the two execs begin working closely together. Diller has been modestly supportive of his new boss, but players in Hollywood and on Wall Street still wonder how the high-octane pair will get on. With Messier weakened, "I see Diller standing there with a knife, waiting for the right time to stick it in," joked one investment banker.
But Messier's no shrinking violet. His sacking of the hugely popular Lescure was a sign of strength (whether it was smart remains to be seen), and he's more than likely to survive the shareholder meeting without being ousted by Vivendi's board, as some French newspapers have speculated.
For now, he seems to be the only one to steer the unwieldy conglom, whose holdings range from U Studios to giant Universal Music to educational publishing, telecom and Internet services -- and a giant water utility.
After the merger, USA Networks will be renamed USA Interactive and house Home Shopping Network, Ticketmaster, Expedia and other electronic assets. Diller is widely expected to go on a multibillion-dollar shopping spree to enhance USA's portfolio of interactive businesses.
