Kate Bulkley, Media Analyst.

King of the jungle

By Kate Bulkley

Cable & Satellite Europe

www.informamedia.com

01 Jun 2003

With the rise of reality TV shows, so far one obvious format has been missed. Think of all the potential for I'm a CEO, Get me Out of Here! The first season could be sprinkled with 'A' list CEOs - the ones who haven't been indicted for fraud or manipulating their company accounts.

The ones still in their jobs. But soon the 'B' and 'C' list CEOs would start auditioning. Just like the half-remembered celebrities that recently graced the screen in the UK on I'm a Celebrity, Get me Out of Here! these washed-up CEOs would be great case studies. And the interactive voting on which CEO should be given another "bush-tucker trial" would be such fun.

Think of the potential audience-grabber of having Martha Stewart, that maven of US serviette folding, who is now facing charges of insider trading?

Put her in the jungle without the benefit of soft lighting and hand-rolled tortellini stuffed with wild truffles for luncheon and what have you got?

Not a pretty sight, I imagine. I'm a CEO, Get Me Out of Here! would be a great way for benighted shareholders to get their own back. Viewer numbers would skyrocket as they watched how fallen suits cope when live bugs are poured onto their heads while they are up to their necks in primordial ooze.

What would Rupert Murdoch do when his feet were held to the fire and he was asked "do you want Channel 5 in the UK or don't you?" He told analysts after BSkyB's on-the-mark results in April that he didn't want it, but would warming up his toes reveal the real Murdoch? And how would Jean Marie Messier fare when made to hang over a pit full of leeches and other jungle grubs and explain how it is possible that he did and did not (at the same time) sell shares in Vivendi Universal just before he announced some really bad news?

But the "coup de jungle" would be Jean-René Fourtou, VU's current CEO, who seems to be doing his best not to have any strategy at all beyond selling everything. So how about tying Foutou to a post buried in a fire ant hive while he explains how paring down a once global media conglomerate into a minor league telecom company and French-only pay-TV business makes any sense at all? Those shareholders who have seen the value of their VU holdings plunge nearly 90% over the past two years to about €15 from a high of €140 would tune in for sure.

And then there is that maestro of survival Barry Diller, surely one of the individuals most likely to come out on top as sole-surviving King of the Jungle. For those of us who watched Diller accept the job from Messier to run VU's entertainment assets (VUE), it was clear that even as he agreed to report to Messier, Diller remained in control of his own destiny. Diller had built in guarantees so once he left VUE he would be in a prime position to become a bidder for the very assets he used to run! USAi's 5.4% stake in VUE gives Diller certain rights over how the VUE assets are sold. And under a separate deal, VU would be forced to indemnify USAi against any capital gains tax triggered from the sale of any of the assets that Diller originally contributed to VUE. Although VU's Fourtou says that liability is avoidable through clever deal-making, the amount, at some $2bn, is not insignificant.

Diller holds a clever hand in this poker game. The usual deal-making suspects are all there, from John Malone to Marvin Davis, but Diller is in a good position to be part of or even lead a bid for any part of the VUE assets he might fancy. Diller is a wily fox who plays all sides. He reluctantly took the top VUE job but he did it while maintaining control of USAi and securing himself lucrative exit clauses. He is positioning himself in both old and new media. What is he doing while Fourtou continues to auction off VU assets? Buying up internet-related companies, most recently adding financial services site Lending Tree to his USAi portfolio. Through Expedia and Hotels.com Diller is already the world's biggest online travel agent, and with only 15% of US and 1% of European travel today booked through the web stands to see tremendous growth.

Diller's move is part of an online business consolidation that has recently seen Yahoo! buying online search and recruitment companies and eBay shelling out to buy the biggest online payments firm. The biggest growth area for all these online businesses is not in the US but in Europe and Asia. As USAi and Yahoo! ramp up their push outside of the US, we may be witnessing the creation of the next generation of global media enterprises - next generation VUs.

Let's hope that Diller and his counterparts at these web firms take a cue from the scripts of their failed CEO predecessors or they may find themselves the next recruits to the jungle show, with no way to get out of there.

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