Malone moves for Vivendi music

John Malone's Liberty Media has bid to take control of Vivendi Universal's music division, home to artists including U2 and Peter Gabriel, as well as the rest of the French media giant's US entertainment assets in a surprise twist to the bidding.

As further details leaked out about the bids for Vivendi's American assets, which include Universal Studios, its theme parks and the Sci-Fi channel, it has become clear the auction will be far from straightforward.

The Vivendi chief executive, Jean-Rene Fourtou, who replaced acquisitive predecessor Jean-Marie Messier last year when the company was on its knees due to rapid overexpansion and the advertising slump, had previously said the music division was not for sale.

The company invited bids for the full Vivendi Universal Entertainment package, which includes the film division, the USA cable channels and the Sci-Fi channel, last month and on Monday received five expressions of interest.

Vivendi's entertainment assets are expected to fetch around £6bn while the music division could raise between £2.4bn and £3bn towards wiping out its £7.7bn debt mountain.

But it has now emerged that three of the main contenders - groups led by the Bronfman family that previously owned Universal, oil billionaire Marvin Davis and US mogul John Malone's Liberty - have bid for the entertainment assets plus Universal Music.

A fourth bidder, film company Metro Goldwyn-Mayer, is thought to have offered to buy the whole company but not the music assets while General Electric's NBC network has only submitted an expression of interest at this stage.

It is thought NBC would rather pursue a partnership with Vivendi, cancelling out its debt in return for a share in a new joint venture. US analysts say the plan could be workable as Mr Fourtou has made a raft of other disposals over the past year and yesterday agreed a new £553m five-year loan.

But the company wants to withdraw from the US altogether and focus on its French business, broadcaster Canal Plus and telecoms company Cegetel. And the last attempt to run VUE as a joint venture ended in disaster, with former chief Barry Diller suing the company for £1.6bn in backdated tax and threatening to block the planned sell-off.

However, Vivendi is keen to bring in as many bidders as possible in order to put pressure on Liberty, which is believed to be in pole position to win the race for the assets.

MTV-owner Viacom, which was thought to be interested, has not submitted a bid but the door remains open for a last-minute grab for some or all of the assets.

The Vivendi board will examine bids over the next few days before whittling down the list at a board meeting on July 1. It hopes to conclude a sale by August, bringing down the curtain on Mr Messier's dream of creating a global media empire spanning Europe and America.