MGM Gives Ultimatum on Universal

Continuing its aggressive pursuit of Vivendi Universal’s entertainment assets, Metro-Goldwyn-Mayer Inc. on Monday offered to sweeten its bid -- but threatened to pull out of the auction unless it gets more financial information about the Universal operation.

In a letter to Vivendi Universal Chief Operating Officer Jean-Bernard Levy, MGM Chief Executive Alex Yemenidjian offered to increase the bid by $300 million to $11.5 billion for the Universal movie studio, theme parks and TV businesses, said sources familiar with the matter.

MGM said that if the requested information wasn’t provided by July 21, the offer would be withdrawn, according to the sources.

Representatives of Vivendi and MGM declined to comment Monday.

MGM’s threat reflects the growing frustration that it and other bidders share over the paucity of financial data provided by Vivendi in preparation for the asset sale, sources familiar with the auction said.

Complicating any sale of the assets is the fact that Universal, like any studio, has agreements with several third parties.

In order to prepare its second bid, MGM said, it wants access to dozens of additional financial records detailing, among other things, Universal’s contracts with cable operators, what movie rights Universal has sold off and its contract with Blackstone Group, which owns half of Universal’s theme park operation in Orlando, Fla.

Universal also has a distribution deal with DreamWorks SKG; a partnership with director Steven Spielberg, who gets a cut of receipts from some theme park operations; and an agreement with HBO, which has a 10-year deal to broadcast Universal movies after their theatrical and DVD release.

Vivendi may be reluctant to share too much financial information with bidders who also are rivals in the entertainment business lest it violate confidentiality agreements, said some who are familiar with the auction.

Primarily a film company, MGM is seeking to bulk up. The Los Angeles studio figures that by combining with Universal, it can save money by cutting overlapping costs. MGM execu- tives also are counting on generating big revenue by exploiting -- through DVD and international TV sales -- what would be a massive library of about 8,000 films.

MGM last month submitted a $11.2-billion bid, thought to be the highest cash offer among three companies and two investment groups that are competing to buy Universal from its French owners.

Liberty Media Corp. and investment groups headed by Edgar Bronfman Jr. and Marvin Davis placed bids as well, and General Electric Co.’s NBC has proposed a merger of assets. Viacom Inc. has said it’s interested only in Universal’s cable channels.

It’s unclear how Vivendi CEO Jean-Rene Fourtou will respond to MGM’s demand.

Those who know him say the former pharmaceutical executive doesn’t react well to demands and wants to avoid being rushed into a decision by any of the bidders. For example, Fourtou refused to budge this year when the Davis group demanded that Vivendi negotiate exclusively with it.

Times staff writer James Bates contributed to this report.