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The Vivendi Saga Continues

Barry Diller and Vivendi Universal CEO Jean-René Fourtou met last week to hash out the future of the ailing French company's TV and movie assets, but there was no showdown—or resolution.

The two executives hooked up in New York as part of a budget review of the Vivendi Universal Entertainment (VUE) division, of which Diller serves as chairman even though he's also chairman and CEO of USA Interactive. Diller is angling to secure control of Vivendi's Universal movie studio and USA Networks operation, with backing from Liberty Media.

Fourtou, in turn, is courting other suitors including former Fox boss and Diller enemy Marvin Davis and broadcast network NBC, which acknowledged last week that it has talked to Vivendi about some of its entertainment assets.

In other words, it's just another convoluted media mess, complete with corporate incest, intrigue and power grabs.

The companies issued a joint statement trying to squelch widespread speculation of an abrupt change. "We have previously said we are each desirous of renegotiating various aspects of the VUE joint venture," the companies said. "These discussions, cordial and collegial, continue." Meanwhile, Diller will continue his odd, dual-management role.

The wrestling match ties back to Fourtou's attempts to unwind Vivendi's messy finances. The acquisition binge by ousted Vivendi Chairman Jean-Marie Messier aimed to use Vivendi's utility assets as fuel for a worldwide entertainment, Internet and telecommunications empire. An abrupt liquidity crisis sent Messier's replacement, Fourtou, on a mission to refinance, slim down and refocus the company as a telecommunications company. That means somehow letting go of Vivendi Universal, which could be worth $20 billion. That could be through an outright sale, as Davis is proposing. Davis, who owned 20th Century Fox in the 1980s, says he can finance a $20 billion bid, orchestrated by a former CFO of Seagram, which owned Universal when Seagram was taken over by Vivendi.

It could also mean something more complicated but possibly more lucrative for Vivendi. Diller and Liberty are proposing creating an entity that would combine VUE with Liberty's Starz! and Encore pay movie networks. Liberty would contribute a billion or so in cash, and the new venture would borrow more. Vivendi would get some cash but also a continuing interest in the venture.