A Diller Move to Vivendi Not Likely

If Vivendi Universal acquires control of USA Networks Inc.’s entertainment assets and folds them into Universal Studios, Barry Diller would seemingly be the ideal candidate to run the operation.

The problem is, the USA chief apparently wants nothing of it.

Sources familiar with the discussions say Vivendi Universal Chairman Jean-Marie Messier has at least broached the subject of having Diller assume a major operational role at the media conglomerate, overseeing a bulked-up Universal film and TV business.

But Diller, who declined to comment, has told people he is keeping a vow he took nearly a decade ago to remain his own boss.

A more likely scenario is that Diller would take the proceeds from any sale to Vivendi and plow them back into the USA electronic retail and information business he would retain control of, including Home Shopping Network, Ticketmaster and the Citysearch online service. Diller probably would acquire distressed Internet companies and seek other prospective deals, with Vivendi retaining a minority stake.

Diller has long valued his independence since resigning in 1992 after running Fox Inc. for News Corp. Chairman Rupert Murdoch. After leaving, Diller became an entrepreneur, cobbling together Internet, TV and film assets he acquired into an entertainment and online retailer valued by investors at more than $9 billion.

People who know Diller well are highly skeptical he would give up his entrepreneurial life to answer in any way to Messier, who recently moved his base to New York and is proving to be a hands-on manager.

Diller took control of Universal’s TV assets, including the lucrative USA and SciFi cable channels in 1998 when then-Seagram Chief Executive Edgar Bronfman Jr. cut a deal to have Diller control them in exchange for a 45% stake. It also gave Seagram veto power over such prospective deals as Diller’s desire to buy NBC. That further galvanized Diller’s desire to remain independent and run his own business unshackled from having to answer to a major investor like Vivendi when a deal presents itself.

France’s Vivendi inherited the relationship with Diller when it bought Seagram for $30 million one year ago. The company has been criticized by some analysts for lacking the kind of U.S. TV assets that could be used to distribute its programming.

But although most industry insiders are skeptical that Diller would work for Messier, some say his joining a big media company like Vivendi might be plausible if he intends to build the entertainment empire he has envisioned.

“I can’t imagine he’s going to let these assets go and not be in charge of something bigger,” said one top TV executive who knows Diller well. “I think Barry’s practical and has resigned himself to being part of a bigger company in order to make the next big move.”

But sources close to Diller say he realizes the opportunities have dried up to build a major traditional media company with a TV network as its cornerstone.

Industry experts said Vivendi Universal could benefit from having a chief operating officer with Diller’s experience.

Diller is considered one of Hollywood’s toughest and most accomplished managers.

Before working at Fox, where he launched the company’s TV network, Diller ran Paramount Pictures and was an executive at ABC.