Viv U taxes get Barry burning

USA Interactive files charges

NEW YORK — Barry Diller turned up the legal heat on embattled Vivendi Universal Tuesday, as his USA Interactive filed suit claiming the Gallic firm has reneged on tax payments.

USAI, which has been negotiating with Viv U for the last five months to sort out the complicated agreement that links Diller to the Universal entertainment assets, claims Vivendi is obliged to make annual reimbursement to USAI for taxes coming due on its preferred shares in VUE.

The wording of the complaint, filed in Delaware court Tuesday, leaves little doubt as to the animosity between the two parties. It also may explain the fear that seems to have paralyzed the debt-encumbered Gallic conglom over its dealings with such fearsome dealmakers as Diller and fellow Viv U shareholder John Malone, who earlier this month filed his own lawsuit over alleged financial improprieties of the Messier regime.

Diller only weeks ago had skirted the issue of whether the tax payment was a matter of bitter dispute when he abruptly left as co-CEO of Universal last month, but insiders say talks with Viv U had grown poisonous (see Daily Variety, March 21).

“Vivendi’s refusal to honor the clear commitment it made under the Messier regime is a classic case of buyer’s remorse — an unjustified refusal to live up to obligations clearly and knowingly made,” the suit claims.

“USA has shown great patience since the management change and liquidity crisis at Vivendi,” the company states in a separate court document, “and many USA executives have worked endless hours to help Vivendi in managing VUE . . . (we) hoped that Vivendi would reciprocate this attitude of cooperation at least by dropping their remarkable reinterpretation of our basic agreement.”

Viv U sources were not available to comment.

Intent cited

USAI says Viv’s first payment on its preferred interest came due, andViv had made clear it had no intention of paying it. Diller is asking the judge to require payment from Viv U.

The documents claim VUE must also reimburse USAI for any capital gains tax due if USA Networks and/or the Sci Fi channel are sold separately as part of any disposal. Diller further asserts his company has the right to block any sale of the individual VUE properties unless the buyer guarantees the value of USAI’s preferred stake — up to $2 billion.

Viv U maintains the payoff is considerably less.

The only way Viv U can avoid a big Diller tax payment is to sell VUE as a whole entity and keep USAI’s 3.4% stake along for the ride. So far, the $20 billion offer by Marvin Davis and ex-U exec Brian Mulligan is the only such offer known to be on the table.

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