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Liberty faces snag

Liberty Media's proposal to combine some of its media assets with those of ailing Vivendi could meet resistance from Discovery Communications.

Liberty owns 49% of the Discovery; the other owners, including Cox Communications and Newhouse, have rights to block such a transfer of ownership.

Liberty is proposing to get a stake in Vivendi's Universal Studios, Universal Music Group, USA Network in exchange for Liberty's wholly owned Starz and Encore pay-movie networks and interest in Discovery.

Vivendi's new CEO, Jean-Rene Fourtou, told employees last week that the entertainment units aren't part of the billions in assets he has committed to sell within the next two years.

Liberty has a long relationship with Barry Diller, who is at the center of Vivendi's Entertainment operations as head of its movie and TV unit and also runs USA Interactive, in which Liberty and Vivendi are major investors.

Industry executives say Diller is hoping to broker a Liberty deal.