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Monday, 17 December, 2001, 21:49 GMT
Vivendi seals $10bn US media deal
Vivendi chief executive Jean-Marie Messier
Vivendi boss Jean-Marie Messier: aiming to "increase synergies"
The French media giant Vivendi Universal has taken control of the entertainment assets of USA Networks for $10.3bn (7.08bn).

USA Networks will be combined with Universal Studios to create Vivendi Universal Entertainment.

The deal will give Vivendi's media content production business much-needed access to a distribution network in the United States, and help it to compete with rival AOL Time Warner.

Vivendi Universal said the new company would allow it to cash in on its hit films such as "Jurassic Park III" and "The Mummy Returns", by bringing them to a larger cable television audience in the US, where USA Networks has about 85 million subscribers.

Neither company expects antitrust clearance to be an issue.

Shares in Vivendi Universal closed up 6.8% at 57.35 euros, while USA Networks gained $1.20 in New York to $25.02.

New pastures

Vivendi started out as a French water company, but has transformed itself into a media and environmental services conglomerate under the leadership of chief executive Jean-Marie Messier.

I started in the entertainment business when I was 20 and haven't lost my curiosity for it

Barry Diller
USA Networks chairman
Last week Mr Messier confirmed talks had been ongoing with USA Networks for several months, "with a view to optimising synergies in the entertainment area".

Vivendi, the world's second largest media company, already owns 44% of New York-based USA Networks.

Barry Diller, USA Networks chairman and chief executive and who retains voting control over the company, will become Vivendi Universal Entertainment chairman.

'Competitive thrust'

Mr Diller told journalists that the deal would allow the new company to "operate on a real scale" and was necessary to provide "competitive thrust".

He also said the company was going to be "tension-free" and full of creative passion.

"I started in the entertainment business when I was 20 and haven't lost my curiosity for it," he added.

USA Networks owns the Sci-Fi Channel and Home Shopping Network.

Strategic fit

Under the deal, USA's entertainment assets will be operated as a joint venture with Universal's movie and theme park operations, which will be run by Vivendi.

Analysts believe that the deal will make sense.

"From a strategic perspective, this deal would give Vivendi much needed access to US distribution," said Mark Harrington, analyst at JP Morgan.

Vivendi Universal was created out of the three way merger of Vivendi, Canadian drinks and media group Seagram and French pay television Canal Plus.

In 1997, Seagram sold USA Networks and the Sci-Fi Network to Barry Diller for $4.1bn.

Vivendi's Jean-Marie Messier
"Vivendi Universal's strategy in the US is coming together"
USA Networks' Barry Diller
"It is difficult to do"
The BBC's Mark Gregory
"This deal creates a huge new force on the American entertainment scene"
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