The Bids Are In: So Far, Four Compete for Vivendi’s Entertainment Empire

The contest for control of Vivendi Universal’s entertainment empire shifted into high gear Monday, with the French conglomerate drawing bids from four media companies and investment groups.

As expected, consortiums headed by Vivendi Vice Chairman Edgar Bronfman Jr. and oil tycoon Marvin Davis each offered to buy all of Universal’s entertainment holdings for about $15 billion, sources said. Those assets include theme parks; the Sci Fi and USA Network cable channels; the vaunted Hollywood studio behind such recent film hits as “Bruce Almighty” and “2 Fast 2 Furious”; and Universal Music Group, home to such artists as U2, Sting and Eminem.

The two other bidders submitted offers of more than $10 billion each, sources said. One was cable titan John Malone’s Liberty Media Corp., viewed by many insiders as a front-runner because of Liberty’s deep pockets. The other, Metro-Goldwyn-Mayer Inc., stepped forward only after controlling shareholder Kirk Kerkorian overcame skepticism on Wall Street and secured a financial commitment from private equity firm Providence Equity Partners.

The bidders and Vivendi declined to comment.

Vivendi had counted on offers from two other major players, Viacom Inc. and General Electric Co.’s NBC.

Viacom, which mainly is interested in the Sci Fi channel, decided not to place a bid after Vivendi indicated it wanted to sell the Universal businesses as a whole. Sources, however, said Viacom might still place a bid.

NBC submitted a letter of interest but stopped short of a bid. NBC is the only major network not affiliated with a film studio and would like to control more content, including the lucrative “Law & Order” TV franchise, which it buys from Universal.

Sources say one scenario considered by GE would involve spinning off its NBC unit into a new company. Vivendi then would merge its entertainment assets into NBC and retain a stake in the new company.

The offers mark the first phase of one of the industry’s most anticipated auctions.

Vivendi had set Monday as the deadline. The offers are expected to be reviewed by the board next Monday, with a second round of negotiations expected in mid-July. The firm hopes to reach a deal by August but hasn’t ruled out a public offering for the Universal holdings.

“These types of assets don’t come on the market very often, so a lot of people are obviously interested,” said Andrew Rittenberry, an analyst with Vivendi shareholder Gabelli & Co. in New York. “It’s positive for shareholders.”

Still, the individual offers fell well short of the approximately $25 billion Vivendi paid Seagram Co. for the Universal entertainment assets in 2000.

The auction comes nearly one year after Vivendi neared insolvency and fired its then-chief executive, Jean-Marie Messier. Messier spent billions on a plethora of deals to transform a water utility into the world’s second-largest media company. New Vivendi chief Jean-Rene Fourtou has said his goal is to sell off assets this year to reduce debt and focus Vivendi on its more profitable French telecom and pay-TV businesses.

Another interested party is Blackstone Group. The private equity firm remains the strongest candidate to buy the theme parks. Blackstone was in talks earlier this year to buy the parks separately but more recently has decided to join in Bronfman’s bid. Seagram heir Bronfman, who is eager to buy back the assets his family once owned, also has the backing of private equity firm Thomas H. Lee Co. and Cablevision Systems Corp.

Times staff writer Jim Bates contributed to this report.