Diller
NEW YORK -- Barry Diller said Tuesday that Vivendi Universal will decide over the next few months whether to keep, sell or restructure its U.S. showbiz assets that he's been running for the past year.
He said a revamp could include Viv U CEO Jean-Rene Fourtou scrapping the entertainment partnership with Diller's USA Interactive and replacing it with a fresh deal giving USAI "more participation in the business."
Diller, speaking at a Salomon Smith Barney media conference in La Quinta, Calif., didn't offers odds as to Viv U's eventual path. As anticipated, he's not a fan of the $20 billion offer led by Marvin Davis .
"If Marvin Davis buys out (VUE) it would be a sad thing for the world," he said.
Diller is under pressure from USAI shareholders after the stock tanked Monday on concerns over future growth. USAI execs have promised in the past not to boost the company's stake in Universal any further.
And in what many Vivendi and U insiders call an awkward conflict of interest, Diller's USAI is suing Viv U for certain payments under the VUE partnership.
Diller's opinion on any final plan is likely to carry considerable weight: As well as being head of the division, he controls a minority stake in VUE through USAI and has built several safeguards into the venture to ensure that his investment is protected.
Fond of Fourtou
Diller had kind words for Fourtou, the French former insurance executive who was tapped to run Vivendi last year following the abrupt departure of previous boss Jean-Marie Messier. Diller praised Fourtou's efforts to pull the company out from under a crushing debt load and to strengthen its ties to the highly profitable French telecom firm Cegetel.
"The management has done a spectacular job with the hand it was dealt," Diller said. "To walk in and find out that the company was running on fumes could not have been pleasant for Mr. Fourtou."
Diller defended the complex deal he cut with Messier on behalf of USAI, in which the company put its television assets into the VUE partnership in exchange for the equity and restrictions on the terms under which Viv U may be allowed to sell off the division.
"When we made the deal, we didn't have any clue that Vivendi was in any sort of difficulty," said Diller of the transaction, which was struck in late 2001. "Since we were parking $3 billion in somebody else's control, we did the prudent thing to protect it."
Hotels.glum
Separately, Diller defended the recently embattled USAI unit Hotels.com, which tumbled in Monday's stock market on news that fourth-quarter results wouldn't meet estimates. Exec argued that Hotels.com's business model remains solid, adding that USAI would look to pick up more shares in the company on any further downturns.
Exec also noted that he would not be averse to selling off at least part of USAI's Home Shopping Network unit, which has been a drag on the company's overall growth rate in recent quarters.
USAI shares rebounded by 3% to $22.97 on Tuesday, after falling 8% the previous day on revenue- and cashflow-growth worries.
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