Inside move: Viacom exex paint rosy pic

Board meeting delayed to buy time for negotiators

NEW YORK — A group led by former Creative Artists Agency chairman Michael Ovitz backed off pursuing a bid for Polygram Holdings on Monday, leaving Seagram Co. with a free run at the film and music giant.

But Seagram’s deal may not be wrapped up for a couple more days. Polygram delayed a board meeting scheduled for today until at least Thursday, sources said, to give the negotiators more time to resolve remaining issues in contention.

People with knowledge of the talks said issues still have to be worked out between Seagram, Polygram and Polygram’s 75% shareholder Philips Electronics. Sources confirmed a report that one of the issues being thrashed out over the weekend was the valuation of Polygram’s film holdings, but they noted it was not the only point still to be settled.

The delay is not as serious an issue for Seagram CEO Edgar Bronfman Jr. as it would have been if Ovitz had pursued an offer. People familiar with the discussions said Ovitz and his backers — leveraged buyout firms Forstmann Little and Thomas H. Lee & Co. — decided the bid simply did not fit their usual investment criteria.

The group had reviewed Polygram’s financial information and met with Polygram management over the weekend and also on Monday before making the decision late Monday afternoon.

Most observers on Wall Street had been skeptical that Forstmann and Lee would bid, given their usual rigorous investment criteria and the advantage Seagram was seen to hold from being able to merge Polygram with Universal Studios.

Polygram stock sank 56¢ to $55.81 Monday as prospects for a bidding war also died. The other potential bidder, a group led by Univision chairman Jerry Perenchio, reportedly has also withdrawn, but that could not be confirmed Monday evening.

Seagram stock dropped $1.12 to $41.81 as Wall Streeters reacted to the possibility Seagram would have to issue a lot of stock to do the deal.