A trio of companies from the original six which expressed an interest may now head the race to buy Vivendi Universal's US entertainment assets which include Universal Pictures film studio.

According to published reports, MGM, Liberty Media and Viacom are likely to make a shortlist that gives them access to a second level of financial data and allow them to make a final, firm bid. But other press reports say that Jean-Bernard Levy, Vivendi chief operating officer, is due to hold meetings in the US this week with Liberty and four other bidders.

When Vivendi Universal's investment bankers last month closed the list, four companies had made firm offers. MGM and Liberty reportedly bid for the film and TV assets alone, while billionaires Marvin Davis and Edgar Bronfman Jr (in conjunction with Cablevision) also bid for the music assets. Two more submitted firm letters of interest; General Electric (GE) and Viacom, which is said to be interested only in the cable TV operations.

However, last week's quietly announced decision not to sell the music businesses, may have ruled out two of the bidders. Both Davis and Bronfman had envisaged that the substantial cash flow from Universal Music would drive their businesses had they won the bidding.

In some reports GE is said to be unlikely to make a shortlist as its offer relies on an industrial alliance between NBC and Vivendi Universal Entertainment (VUE) and involves little hard cash. However, sources close to GE/NBC insist that the group is still very much in the hunt. A source quoted by the Financial Times said: "GE has not yet revised their proposal. They have been in dialogue explaining their position and where they have flexibility and where they don't."

Which company is the favourite is now moot. MGM is understood to have offered $11.2bn excluding debt. (End of 2002 debts at VUE were $4.6bn.) But it could run into regulatory problems as it already controls one Hollywood studio.

Liberty Media this week agreed to pay out $7.9bn (in a mixture of cash and commercial debt) for the outstanding shares in home shopping channel QVC. Its owner John Malone insists that it still has the financial resources to buy VUE, although its offer is said to have been lower than MGM's.

As the world's largest media conglomerate, Viacom arguably would have least problem raising the ante, but it is not clear whether it can be persuaded to extend its offer to the whole of VUE.

Hanging on to the music assets averts some short term tax problems for Vivendi Universal, but leaves it with some ongoing problems. Given the current state of the world music industry a sale now would not have raised a large amount of money, but hanging on keeps Vivendi a mixed media trans-Atlantic conglomerate at a time when it was seeking structural simplicity as a European pay-TV owner.