Comcast pulls out of the bidding for Vivendi's entertainment assets

Comcast yesterday became the latest company to drop out of the auction for the US entertainment assets of Vivendi Universal, narrowing the field to three and raising concerns that the embattled French firm might not get the price it was hoping for.

After intense speculation, Comcast, the largest cable company in the US, issued a one-sentence statement confirming that it would not be making an offer for the division. The decision was made during an all-day meeting on Wednesday.

A number of potential buyers have balked at Vivendi's demand that the bids be above $14bn (£8.7bn) for assets which include a handful of cable channels, theme parks, the Universal Hollywood film studio and a television production business. Vivendi set a mid-August deadline for bids.

The cable firm is the second company to drop out of the auction, following Metro-Goldwyn-Mayer's decision to withdraw its $11.5bn cash offer. John Malone's Liberty Media has also turned cool on making an offer.

Of the remaining contenders, none are ideal proposals for Vivendi, which is desperate for ready cash to reduce its debts.

General Electric's NBC has proposed a merger with the Universal assets but the proposal does not include any initial cash payments. Edgar Bronfman Jr, the former Seagram boss who sold the assets to Vivendi, has reportedly made a complex offer which would involve loading the business with debt, while Viacom is only interested in the cable TV stations.

Speculation mounted that Comcast was serious about making a bid after it hired former Universal Studios boss Frank Biondi as a consultant. The company became interested last month after selling its stake in QVC, the home shopping channel, to Liberty Media for $7.9bn.

According to a Reuters report, the company felt that the assets, particularly the cable channels including the Sci-Fi and USA networks, were overvalued.

Vivendi has indicated that it could pursue an alternative to an outright sale if it fails to attract a high enough price, including a possible flotation. It could also sell the assets piecemeal.

Vivendi invited offers for the American entertainment business in an effort to pay off crippling debts which were built by the former chief executive Jean-Marie Messier as he attempted to build a global media empire. His efforts took the company to the brink of financial disaster, leading to his own ousting last year. Vivendi has set a target of €7bn (£4.9bn) from disposals this year.