|
Viacom seeks USA auction
|
 |
June 30, 1997: 7:41 p.m. ET
Media giant wants USA Network tie-up with Seagram dissolved with sale
|
NEW YORK (CNNfn) - In an ongoing legal battle with MCA Inc. over control of their 50-50 partnership in USA Network, Viacom Inc. Monday asked a Delaware judge to dissolve the partnership and set a date for the auction of the entertainment network.
In court papers filed Monday, Viacom said an auction process would ensure USA Networks will net a fair value.
"It is undisputed that the value of USA Networks has increased substantially since Viacom's acquisition of Paramount ... If Viacom were to be the seller, anything other than an auction would work an impermissible forfeiture on Viacom which would be unmeasurable," Viacom wrote.
"Such an auction would effectively dispose of the assets used in the venture, while working no forfeiture and conferring no windfall on either Viacom or MCA."
On May 15, Delaware Vice Chancellor Myron Steele ruled that Viacom violated the network partnership agreement, which prohibits the two from starting entertainment networks that could compete with USA Networks. MCA, a unit of Seagram Co. Ltd., had sued Viacom over its Nick at Night TV Land network. Vice Chancellor Steele gave both companies until June 30 to file proposals on how to resolve the dispute.
However, the proposals filed on Monday aren't likely to end the legal battle.
According to sources familiar with the situation, MCA's lawyers have asked the judge to enjoin Viacom from venture, forcing Viacom to sell to a third party or to MCA, which has stated publicly they are interested in purchasing Viacom's stake.
"I have to say [Viacom has] made something simple into something complex," said a lawyer familiar with the situation.
Analysts said Viacom's approach is expected to get the best price for its investment, regardless of their joint venture partner. "It's a way of getting a fair value for it," said David Londoner, media analyst at Schroder Wertheim. "They want to be out of it and they want to get the highest price."
Londoner said Viacom isn't likely to get a large premium if the buyer in the transaction is going to have to share control of the network with MCA.
"Anytime you get shared control, you can't get the premium," he said.
-- Robert Liu and Cyrus Afzali
|
|
|
|
|
|
USA Network
Viacom
MCA
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
