Viacom, Seagram point fingers in sell-off
NEW YORK — Viacom and Seagram filed legal memorandums Friday criticizing each other’s plans to dispose of their jointly owned cable services, the USA Network and Sci-Fi Channel.
Both sides foreshadowed their responses when they briefed reporters separately June 30 in the aftermath of the filing of their plans before a Delaware Chancery Court, each laying out a different solution to an eventual sale of the two channels.
Seagram — which won a big battle May 15 when Delaware Vice Chancellor Myron T. Steele ruled that Viacom had breached its partnership agreement — basically wants to trigger the buy/sell provision that’s part of its original agreement with Paramount, which Viacom inherited when it bought out the studio three years ago.
In that provision, Viacom would write a dollar figure on a piece of paper evaluating the worth of 50% of both networks, and an outside investment banker would come up with a price based on a fair-market evaluation of USA and Sci-Fi. Seagram then could either buy Viacom’s interest at the lower price, or sell it to Viacom at the higher price.
In its June 30 filing, Viacom said it had offered to buy Seagram’s half of the two networks for $1.94 billion, a proposal that Seagram rejected. Cable analysts say both networks are worth about $1.7 billion. But the two are more valuable than that to Viacom because it could save big bucks by folding USA and Sci-Fi into its already thriving cable network operation the MTV Networks, which include Nickelodeon/Nick at Nite, MTV and VH1.
Seagram says it has no plans to sell, because it doesn’t own any other cable network and wants to use USA and Sci-Fi as the base of a wholly owned cable operation to distribute its TV series and movies.
Viacom opposes the buy/sell plan. It’s asking the Delaware court to put both networks up for auction and let the highest bidder come away with the spoils.
Although there’s no timetable for a court decision, sources say Steele could render his opinion before the month is out.