U turn could be in USA Nets’ future

Studio rethinking tube deal with Diller

Four years after former Seagram topper Edgar Bronfman, Jr. unloaded Universal’s TV biz, the studio’s new parent is bargaining hard to bring it back into the fold.

“When you look at the success of the studio, there’s a very good basis for TV production,” said Jean Marie Messier, chairman-CEO of Vivendi Universal.

Bronfman sold U’s money-losing domestic TV production arm to Barry Diller in October of 1997 in exchange for $1.2 billion in cash and a 45% stake in Diller’s company, which changed its name from Home Shopping Network to USA Networks Inc.

It was a controversial move in Hollywood and a transforming event for USA. Wall Street liked it at the time, given Diller’s impressive track record.

While careful to note that any attempt to revamp the TV deal is “no judgment on the past,” Messier said it’s simply become too constricting, as U continues to churn out box office hits and Messier constantly seeks synergies among Vivendi’s various businesses.

He wants to restructure the arrangement sooner rather than later — possibly over the next several months.

Bringing the division back under Universal is one option.

“Pierre Lescure and Ron Meyer are pragmatic businessmen, as is Barry Diller,” Messier told a group of reporters during a lunch to discuss Vivendi’s quarterly earnings.

On the other hand, everyone at VU acknowledges Diller’s need of autonomy.

Speaking to Daily Variety in Paris Tuesday, Lescure, who is VU co-COO, said that “Jean Marie and Barry have spoken about everything imaginable that could extend Barry’s power and weight in terms of distribution. We can imagine that our financial arrangement will evolve tomorrow if a large scale mutual operation presented itself.”

Lescure went on to say: “When one gets to the level of responsibility that Barry had with Murdoch and then decides, in his prime but at the same time in the last stretch of his career, he wants to go it alone,” Lescure continues, “well, you don’t have to have a Nobel in psychology to realize that for Barry it’s essential that he feel free.”

Studios USA is best known as the producer of its flagship “Law and Order” and two spin-offs. Its syndication arm puts out a series of successful talk shows, mostly inherited from the Universal days. It also turns out original movies for the parent company’s USA and Sci Fi cable networks and the “Invisible Man” series for Sci Fi.

Universal’s ramping up its TV production would come even as fellow studio Sony dramatically pares down in that business, suggesting how financially tough it is in the days of giant media congloms to produce shows without owning a broadcast network or other distribution outlet.

Separately, Messier appeared rather relieved at the planned merger between satellite providers EchoStar and DirecTV.

He declined to comment on News Corp.’s unsuccessful run for DirecTV, but he said two independent distributors coming together presents an opportunity for Vivendi’s content, while it’s more threatening if a direct competitor amasses significant distribution.

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