At end of play yesterday (Sunday), it looked certain that Barry Diller will be named the film and TV overlord at Vivendi Universal as early as this morning - a move that would appear to relegate its current entertainment chief Pierre Lescure to the managerial sidelines within the French-American conglomerate.
In a widely cited story in The Los Angeles Times yesterday, Vivendi Universal is said to have approved a plan hatched by its chairman Jean-Marie Messier to acquire the film and TV businesses currently controlled by Diller's USA Networks for $10bn. Vivendi and Universal remained mum about the deal on the west coast yesterday.
Diller will join Vivendi Universal as part of the agreement, running a newly carved-out fiefdom within the trans-Atlantic empire that would embrace all its entertainment production and distribution interests, aside from Universal Music Group which will remain separate. Similarly USA's Home Shopping Network and Internet companies, which include online ticketing concern Ticketmaster, are not for sale in the deal.
According to the Times story, the proposed deal involves mostly stock, although precise terms were not yet known. It is still subject to approval by USA Networks shareholders, although USA's board reportedly okayed the deal yesterday.
Although a notoriously hands-on taskmaster, Diller's role at the studio is likely to be much more strategic than a traditional Hollywood mogul and revolve around equipping Universal for the impending onslaught of digital and interactive platforms.
Since Diller would report only to Messier, such a scenario begs questions about the future role of Lescure, the former Canal Plus chief who is currently charged with overseeing all Vivendi's film and TV operations from his headquarters in Paris.
Tellingly, Messier told reporters this weekend that the future commitments of Barry Diller, together with those of Ron Meyer, president of Universal Studios and Stacey Snider, CEO of Universal Pictures, "would be absolutely key for the future" but made no mention of anyone else.
Placating his old friend Lescure is just one of Messier's potential structural headaches. Another is how to integrate USA Films into a studio production and distribution system already complicated by the overlapping reach of both Universal Pictures and StudioCanal. One option may be to leave USA Films as an autonomous specialist division in much the same way that Miramax Films exists under the aegis of the Walt Disney Co. The future of Universal's own specialised marketing and distribution operation Universal Focus is naturally in question.
Then there is how the issue of how exactly Michael Jackson, the former Channel 4 chief executive whom Diller spent a year wooing as his own chief entertainment lieutenant, will fit into the Universal reporting hierarchy.
The USA deal is by no means a foregone conclusion. For one thing, it needs the blessing of cable titan John Malone, a 21% shareholder in USA Networks who is known for demanding draconian and sometimes deal-breaking concessions whenever his signature is called for.
Should terms be worked out, Messier will then need to establish how Diller can both run Universal Studios as its chief executive officer while at the same time continuing to boss USA's various electronic retailing businesses that will come under Diller's complete ownership upon completion of the deal. This dual structure is one way that Diller can at least partly honour his pledge, made at the time of quitting Rupert Murdoch's News Corp, never to be answerable again to another mogul.
But although having one man run two companies is not unheard of - Steve Jobs, for example, is currently chief of both Apple Computer and the Pixar Animation company responsible for Toy Story and Monsters Inc - there could still be perceived conflicts of interest, if not managerial priorities, for Diller.
That Messier is willing to bend over so much to accommodate Diller, even to the point of pushing panic buttons across all levels of own high-flying Hollywood studio, speaks volumes about his need to bring on board a talismanic figurehead who can help sell Vivendi Universal's giddy convergence vision to a skeptical Wall Street.
To the uninitiated, Messier's deal-making spree over the past year has seemed nothing short of a Napoleonic land-grab that either lacks a coherent strategy or else is predicated on an internet and wireless revolution that has failed to materialize.
It is for this reason that the French mogul has set his sights on more down-to-earth ambitions lately. His two latest targets - a stake in the EchoStar satellite service (see separate story) and now his attempts to bring USA back into the Universal fold - are efforts to plug the one glaring hole in portfolio, namely the lack of a guaranteed television outlet in the US.
The absence of a domestic television presence was something which Messier inherited when he acquired control of Universal Studios from Edgar Bronfman's Seagram family empire. (Last week Bronfman quit as executive vice-chairman of Vivendi Universal, a departure that now seems to have been triggered by the imminent arrival of Diller).
When still chairman of Universal in 1997, Bronfman famously sold Diller both Universal's television production operation together with its cable channels, USA Network and the Sci-Fi Network in a deal value at around $4bn.
Although Universal was left with what is now a 43% stake in USA Networks, it ceded completely control. The net result has been that Universal has been unable to exploit its stable of box office franchises on the small screen, creating television spin-offs, for example, of either The Mummy or American Pie.
Equally, Diller has found himself hamstrung by the arrangement, held back in his stated ambition to buy a US network such as NBC by a veto power that Universal retained when it came to mergers and acquisitions beyond a certain scope. The fact that Universal also had international distribution rights to USA's television productions also turned potential co-productions with US partners into a legal quagmire.
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