As Vivendi Comes Down To Wire, Madison Avenue Yawns

It's the most closely watched media deal of the moment, but the high-stakes negotiations over Vivendi Universal's U.S. media and entertainment assets are nothing more than a ho-hum story on Madison Avenue.

"It's not going to matter one way or another," opined Jon Mandel, co-chief executive at MediaCom Worldwide and one of the nation's top media buyers, referring to the outcome of talks to acquire assets which include USA Networks.

That sentiment apparently is not shared by the two finalists in the bidding war, NBC and an investment group led by Edgar Bronfman. Jr.

Vivendi Universal Tuesday said it plans to continue talks with both bidders after its board met Tuesday afternoon at its Paris headquarters to discuss the bids. Both offers were said to include cash and other financial aspects and NBC for one said the merger would transform its enterprises.

Meanwhile, either bid is not expected to relieve Vivendi of its entire stake in VUE. Vivendi said it would maintain a minority interest in VUE if either bid were accepted. Vivendi also said it was considering an initial public offering of stock for VUE, which would follow what the company said in a statement would be "strategic alliances" to strength the TV units. Vivendi couldn't be reached for comment Tuesday evening.

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In addition to USA and Sci Fi, the assets include Trio and Universal Studios. Vivendi purchased the cable units in 2001. Vivendi has become the third- largest entertainment company in the world but the acquisitions have come at a cost: It owes more than $15 billion and lost $25.6 billion last year alone.

When the assets went on the block earlier this year, it was reported that Vivendi set the floor for bidding at $14 billion. Along the way, other bidders - including Metro-Goldwyn-Mayer and Liberty Media Corp. - dropped out. MGM said its $11.5 billion all-cash proposal had been rejected and said Vivendi's asking price was too high. On Monday, Liberty told Vivendi Universal that it wouldn't continue in the bidding process. CEO Robert Bennett said Vivendi Universal Entertainment's assets were of high quality but weren't enough to justify how much it would cost. Liberty has a 3.6% stake in Vivendi.

A deal with NBC would make the combined operation one of the world's largest media companies, a fact noted by Vivendi. NBC couldn't be reached for comment late Tuesday.

The other bidder is led by Bronfman, who has a seat on the Vivendi Universal board after Universal merged with it back in 2001. Others involved include Cablevision and private equity fund Thomas H. Lee Partners.

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