Tags:
Journalism of Courage
IAC/INTERACTIVE Corp, the Internet conglomerate led by media mogul Barry Diller, has agreed to sell its 5.4 per cent stake in Vivendi Universal Entertainment (VUE) to NBC Universal for $3.4 billion.
The cash-and-stock transaction announced on Wednesday removes a complicated financial overhang for both NBC Universal and Vivendi Universal, who have been haggling with Diller in courtrooms and boardrooms for about five years.
The deal consolidates control of NBC Universal, the media and entertainment company that is 80 per cent owned by General Electric and 20 per cent owned by French media and telecoms group Vivendi Universal.
Vivendi Universal also agreed to delay by a year, to January 2007, the date when it can first opt to sell its stake in NBC Universal as part of the transaction. GE also will wait an extra year, to May 2010, before it can force a buy-out of Vivendi’s equity stake.
‘‘We have put a definite end to any kind of relationship between Vivendi Universal Entertainment and Barry Diller’s company InterActive,’’ said Vivendi Chief Executive Jean-Bernard Levy during a conference call with journalists.
IAC, which owns TV channel Home Shopping Network and Websites Ticketmaster, Match.com and Lending Tree, is receiving cash, about $1.4 billion of its own shares and $100 million in advertising across NBC Universal’s networks over three years.
New York-based IAC said it would result in an after-tax gain of $330 million.
Vivendi said it is paying $235 million in cash as part of the agreement to eliminate a 17-year requirement to make annual payments of $30 million. It is recording a one-time cash gain of $244 million.
The French company also said the deal freed it from an obligation to pay GE up to $520 million in connection with a possible loss on any sale of the group’s theme parks before 2008.
As part of the deal, all parties have been released from potential claims relating to IAC’s investment in VUE, the companies said in a joint statement.
‘‘There remained a whole range of assets and liabilities between each other that burdened the exploitation and management of financial assets,’’ Levy said.
VUE was created in 2002 by Vivendi Universal and IAC inconnection with IAC’s sale of its entertainment assets, including cable channels USA and Sci Fi.
That deal, because of the debt needed to finance it, ultimately toppled Jean-Marie Messier’s vision of transforming Vivendi from a water utility into a global entertainment powerhouse.
VUE became part of GE in May 2004 as Vivendi unwound the debt-laden components that almost sank the company.
