Vivendi, USA Networks deal stalls Expedia sale

NEW YORK -- While most of the focus was on film and television assets, the US$10.3 billion deal this week between media giants Vivendi Universal and USA Networks also impacts the online travel industry and holds interesting promises for mobile commerce.

Several days after confirming that discussions were underway, Vivendi CEO Jean-Marie Messier and USA Networks CEO Barry Diller held a press conference Monday to announce plans to combine USA Networks with Vivendi's Universal Studios and to create a new company called Vivendi Universal Entertainment. Less than an hour later, on the other side of the continent, Expedia announced it would postpone asking for shareholder approval Diller's plan to buy a 75% stake in Expedia for an estimated US$1.5 billion.

Apparently scrambling, Expedia had issued a statement the previous week on rumors of the talks between Messier and Diller that an annual shareholder meeting would take place as scheduled Monday, 17 December. But, while the Messier-Diller press conference was still in progress, Expedia said the updated documentation would be gather and presented to shareholders some time next year. Last July, USA Networks had tentatively reached a complex agreement with Microsoft, Expedia's largest shareholder, to buy a controlling interest in the online travel site.

Apart from the proposed Expedia investment, Diller has other large interests in Web-based travel sales and services. These include Ticketmaster.com, Citysearch.com, ReserveAmerica, TicketWeb, and Hotel Reservation Network.

Diller enters Internet travel

With his established interests in interactive Web sites, entertainment and direct selling, Diller's entry into the $17 billion Internet travel industry is connected to his strategy that his cable television viewers can be tapped to buy tickets online. Assuming the Expedia shareholders eventually approve the deal, USA Networks would be the first to have both a travel Web site and a television show focusing on travel. This could put Expedia, now third among the giants, ahead of Travelocity and Orbitz.

In the past five years, Messier has transformed Compagnie Générale des Eaux (General Water Company) from what was essentially a water and sewage management company, to the second largest media and communications conglomerate in the world, renamed Vivendi Universal. Under Messier’s leadership, the old state-established water company shed its sewage and power arms and instead bought into media businesses, including the pivotal purchase in 2000 of Seagram, the Canadian owner of Universal entertainment businesses.

Messier has said that his goal is to build an unparalleled global content and distribution network. One of Messier’s most talked-about pieces in this puzzle is Vizzavi, a multi-access portal being developed with Vodafone. "Everyone has had so much focus on Vizzavi, because Vizzavi is clearly the future of this business, whether it works or not," Messier recently told the Financial Times. 

Vizzavi, the European gate Internet of Vivendi Universal, accounts currently more than 700.000 registered users. Vizzavi, a joint venture between Vivendi Universal and the British operator of mobile telephony Vodafone, are established in Great Britain, the Netherlands, France and recently announced for Spain.