Barry Diller has been talking to Viacom chief Sumner Redstone about a possible joint bid for Vivendi Universal's U.S. show business empire, Reuters reported on Tuesday quoting 'sources close to the auction.'
Diller, a former Vivendi executive who owns a stake in company's entertainment assets, is eyeing the multi-billion-dollar auction of the film, television and theme park business.
However, Diller is not formally allowed to bid in the auction - according to an agreement struck when Diller originally sold his USA Networks business to Vivendi.
But Reuters said that Vivendi might waive that clause if Diller teams up with another bidder to make a late entrance to join a high-profile bid battle.
The New York Post reported on Tuesday that Viacom could purchase all of VUE and then spin off the movie studio and theme parks into a private company controlled by Diller.
Such a deal would overcome a tax liability that would result from breaking up the entertainment business, the newspaper said.
Five bidders have so far made it into the second round of the auction - Viacom, Liberty Media, MGM, General Electric's NBC and Edgar Bronfman Jr.
John Malone's Liberty Media has been seen as early favourite in the auction.
But MGM has reportedly posted one of the highest bids. This week it told Vivendi that it would raise its bid to $11.5 billion, but only if it got more access to financial data.