Report: Diller, Vivendi in media deal

LOS ANGELES, Dec. 16 (UPI) -- A complicated $10 billion stock deal between Vivendi Universal and USA Networks will reportedly put veteran mogul Barry Diller firmly back among Hollywood's powerful elite, according to a published report Sunday.

The Los Angeles Times, citing sources close to the negotiations, said Diller would head up a Vivendi-controlled company that includes its Universal Studios film and theme park operations along with USA's cable network and television and film production units.

Vivendi and Diller are now in a position to muscle into the lofty positions of power occupied by Disney, Viacom and AOL Time Warner, the Times concluded.

Vivendi, a French conglomerate and the world's second-largest media company, now has the genre of entertainment distribution and cable access that analysts had seen as lacking despite its encroachment into the United States. Vivendi this year purchased publisher Houghton Mifflin for $1.7 billion and spent $375 million on MP3, the developers of downloadable files used by Napster and other on-line music services.

Vivendi on Friday also agreed to acquire an 11-percent stake in the U.S. satellite television service EchoStar, nailing down access to 6.5 million viewers for Vivendi programming.

The 59-year-old Diller, a hard-driving Hollywood insider who is popular in Wall Street financial circles, gains command of Universal, one of the United States' leading film studios and producer of such recent hits as "The Mummy," "Jurassic Park," and "Traffic."

"With Barry there, Universal is the place of the moment," Vanity Fair Editor Graydon Carter, a Diller confidant, told the Times.

Vivendi's deal with Diller is also seen as something of a coup for its chairman, Jean-Marie Messier, since Diller had left the chairmanship of Fox, Inc. in 1992 after declaring he was not interested in working for another person.

Diller is expected to remain true to form as the demanding, determined, hands-on executive he was when he ran Paramount in the 1980s.

"He always brings an enormously probing, challenging, creative environment," said David Kissinger, president of USA Television Production Group. "Nothing is sacred."