A federal court in Manhattan on Monday said that Vivendi must pay Liberty Media nearly $1 billion in damages stemming from the French conglomerate's ill-fated foray into the entertainment industry at the turn of the century.
The U.S. District Court for the Southern District of New York awarded Liberty 765 million euros ($954.6 million) in damages on Monday for breach of contract and fraud stemming from Vivendi's 2001 purchase of Liberty's stake in USA Networks.
Vivendi purchased USA Networks - which then included USA Network, Sci-Fi Channel and Trio - several other cable networks and the Universal Pictures movie studio in a flurry of deals between 2000 and 2001, part of then-Vivendi chairman Jean-Marie Messier's plan to turn the staid French utilities firm into a global media powerhouse. As part of its USA Networks deal, then-valued at about $10.3 billion, Liberty swapped its minority stake in the channels for Vivendi shares.
Liberty claimed in the suit, filed in 2003, that Vivendi repeatedly misrepresented its true financial health, failing to disclose its staggering debt load and concerns about its liquidity.
That debt load, estimated to be about $17 billion at the time, led to Messier's ouster and Vivendi's plan to sell off its entertainment assets. In 2003, General Electric Co., purchased those assets for about $14 billion, forming NBC Universal. In 2011 Comcast purchased a controlling stake in NBC Universal, with GE retaining a 49% stake.
Vivendi said in a statement that it "strongly disagrees" with the verdict and that it "intends to pursue all available paths of action to overturn the verdict or reduce the damages award."
Liberty said it intends to seek pre-judgment interest on the jury award, which won't be entered until the court rules on any post-trial briefing. Although the company said in a statement it expects Vivendi to ask the court to set aside the verdict during that process, it is confident the decision will stand.
Liberty was represented by Baker Botts L.L.P. in the action. The defendants were represented by Weil Gotshal & Manges LLP and Cravath Swaine & Moore LLP.
MOST READ
