DILLER DROPS VIVENDI JOB MOGUL ON MOVE, MAY BE IN BUYING MODE.

Byline: Gregory J. Wilcox Staff Writer

UNIVERSAL CITY - Hollywood mogul Barry Diller resigned Wednesday as co-chief executive of Vivendi Universal Entertainment, a move that could help the financially struggling French parent sell its U.S. studio, theme park and related assets.

Diller retains his titles of chairman and chief executive officer of media conglomerate USA Interactive, whose holdings include Ticketmaster, Home Shopping Network, Expedia and Match.com.

In a separate announcement, Diller said USA Interactive would buy the shares of publicly held Expedia that it doesn't already own for about $3.3 billion.

The resignation could also position Diller to bid on Vivendi's high-profile properties, including Universal Studios and the attendant theme park based in the east San Fernando Valley community of Universal City.

However, in a conference call Diller downplayed that possibility.

``We are a minority shareholder in VUE,'' Diller said. ``It's possible an opportunity will be presented to us. Who can tell about that? But we are part of no group, we are part of no plot, and we will see what we will see.''

Diller owns a 1.5 percent stake in Vivendi Universal Entertainment while USA Interactive owns 5.4 percent.

Diller also issued a statement saying it was appropriate to relinquish management responsibilities at Vivendi Universal since the parent company is weighing options for the entertainment assets.

Earlier this month, the company chairman and chief executive officer, Jean-Rene Fourtou, acknowledged that Vivendi had been discussing an asset sale with various potential buyers.

Fourtou also characterized Diller's tenure at Vivendi Universal as temporary.

``I would like to thank Barry Diller for his efficient, friendly support over the past few months, which have been a very difficult period for Vivendi Universal,'' he said in a printed statement.

The company's problem was massive debt that piled up during a buying spree several years ago. It once totaled about $40 billion and has now been reduced to about $13.5 billion.

In December 2001, Vivendi Universal bought Diller's USA Network, Sci-Fi Channel and a television production company and created the joint-venture Vivendi Universal. Diller became the venture's chief executive.

Fourtou assumed leadership of the parent company in the middle of last year and decided to sell the U.S. assets. That prompted Diller to keep his job at Universal on a temporary basis.

Vivendi could sell its U.S. holdings as a package or piece by piece.

One serious potential buyer is oil tycoon and former 20th Century Fox owner Marvin Davis. He reportedly met with Fourtou earlier this month and has offered $20 billion for the assets in partnership with a private equity firm. Davis could not be reached for comment.

Analysts also speculate that Culver City-based MGM and Liberty Media Corp., run by cable television magnate John Malone, are potential buyers.

An MGM spokesman said the company had no comment on Wednesday's development.

That company's problem might be a weak balance sheet, though.

``I think they clearly would be interested, but the question is how would they get that kind of deal done,'' said entertainment industry analyst Richard Read at Credit Lyonnais Securities.

But Vivendi's domestic assets would broaden MGM's asset base and add value to its film library.

Liberty Media, based in the Denver suburb of Evergreen, would also be a good match, and the company has signaled its intent to raise cash by indicating it plans to sell its stake in QVC Inc., now owned by Comcast Corp.

That company was closed Wednesday because of severe weather in the Denver area.

Liberty's brands include Encore, Starz! and Discovery, so there is some synergy with Universal's operations.

``I think the media landscape in 2003 will be ripe with transactions. You've had three years of carnage in the media sector, and some survivors like Liberty have a lot of liquidity. Anything like Vivendi is something that Liberty is going to take a hard look at,'' said analyst Ted Henderson at Stifel Nicolaus & Co. in Denver.

Diller started his entertainment career at ABC and rose to prominence via the movie-of-the-week program. He also headed Paramount and 20th Century Fox, helping to create the Fox Network.

His resume includes the hit television shows ``Married with Children'' and ``The Simpsons.''

Investors did not have much reaction Wednesday to Diller's announcement. Vivendi Universal's stock ended the trading day at $15.36, up 56 cents or 3.78 percent.

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