Diller casts shadow over proposed NBC-Vivendi merger

Barry Diller is a force that must be reckoned with in the continuing negotiations for the merger of the NBC Television Network and Vivendi Universal. The former movie mogul sold his USA Networks to Jean-Marie Messier at Vivendi Universal two years ago at the top of the market in exchange for a complicated bundle of shares and financial obligations.

Now, it’s payback time. Diller remains the chief obstacle in allowing NBC to achieve its goal of merging with the film and television assets of what was once called Universal Studios.

If completed, NBC's assets - the broadcast network, local stations, the cable channels CNBC and MSNBC and the Spanish-language network Telemundo - would be merged with Vivendi’s motion picture and television studios; its cable networks including USA, Bravo, and Sci-Fi; and the Universal Studios theme parks.

However, a key factor in completing the merger is the accommodation of Diller, the chairman of InterActiveCorp, who owns a seven percent stake in Vivendi’s entertainment assets. Analysts have said the knot of financial and contractual obligations that Vivendi has with Diller are so complex that even Wall Street and the companies themselves hardly comprehend what it will take to satisfy him and allow the merger to move forward.

Diller, 61, has often used the figure $2.4 billion as a round number. But it is unknown how far NBC will go to accommodate him and whether ultimately he might cause the merger to stall.

Not only has Diller played the odd man out in the deal, he’s no team player on the corporate agenda. He has very publicly broken with his fellow media executives over their pet causes. For example, he opposed the FCC’s proposed ownership rules, saying there’s a need to stop vertically integrated giants from choking off new media voices.

The media conglomerates “only have to do favors for each other,” he said in a speech at last April’s NAB convention in Las Vegas, Nev. “They only have to accommodate each other. No one else matters. The conglomerates are like the Rothschilds funding both sides in the Napoleonic wars. They are on both sides of virtually every transaction.”

In a recent interview with the New York Times, Diller wished NBC and Vivendi well and expressed an openness to begin negotiations with them over his future ties to Vivendi. “We are happy in the most collegial way to discuss undoing the partnership. We have said that for a year now. And if they don’t, we expect they will respect the agreement we have. Full stop,” he said.

Diller told the Times that for now he is in no hurry to cash out the obligations. “We have an agreement, which we are happy to keep, change nothing, not a comma, and live happily ever after,” he said. “If the parties wish to change it, they will tell us.”

But, Diller concluded: “You know what? All that it involves is money.”

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