Vivendi Universal Entertainment chairman Barry Diller has been named interim co-chief executive officer of an expanded entertainment division, loosely called Universal Entertainment. The music and highly lucrative video game divisions join Vivendi Universal Entertainment's film, television and theme park assets under one roof in a move analysts say will create cohesion and sets the scene for a possible public offering in the first half of next year.
While Universal Entertainment is currently a non-legal entity and managerial structure, the consolidation of assets and enhanced role for Diller paves the way for a more focused division. Parent company Vivendi Universal's many competing interests have been a source of frustration on Wall Street and there was growing speculation this week that the entertainment assets would be spun off into a stand-alone company. Under this scenario it is considered likely that Vivendi would retain a 40% stake, with Diller and other division heads coming in as equity partners and the rest going to the public.
Diller's enhanced control over all of Vivendi's entertainment assets frees up the media conglomerate's chief executive officer Jean-Rene Fourtou to concentrate on strategic planning and debt eradication. Vivendi owes in the region of $19.1bn and it is understood that Fourtou will focus on a take-over bid for French phone group Cegetel, in which Vivendi owns a 44% stake.
A company spokesperson refused to comment on the spin-off scenario, choosing instead to stress that Diller's interim role was a logical step that created a strong management team. However further credence was added to the rumours earlier this week when Vivendi's vice chairman Edgar Bronfman Jr, whose family sold Universal Studios and Universal Music Group to Vivendi in 2000, told The Los Angeles Times: "The end game is clear. You are going to have to end up with an American-listed vehicle that U.S. media investors can buy into."
Diller has a 1.5% stake in Vivendi Universal Entertainment following the sale last year of his USA Networks' USA and Sci-Fi Channel cable networks, film and television studios to Vivendi Universal Entertainment. A spin-off would incur a $1bn tax bill for the company if it happened without his say-so.