The cash and stock purchase will likely see USA Networks chief Barry Diller take a senior role at Vivendi following the merger. The former head of Fox and Paramount studios in Hollywood is being tipped to take over the running of Universal Studios' film, television and theme park businesses.
The acquisition gives Vivendi chairman Jean-Marie Messier control of film and TV assets including the USA and Sci-Fi Channel cable networks, and film and television production units. They will be combined with Universal's own entertainment operations into a new company.
USA Entertainment is the business that Michael Jackson left the chief executive's job at Channel 4 in July to run.
Vivendi already owned 42% of USA Networks, valued at £6.3bn and is effectively trading that for control of the entertainment business, leaving Diller with control of USA Networks electronic retailing business, including the Home Shopping Network and Ticketmaster, which is not part of the deal with Vivendi.
It marks the culmination of a 40-year career for college drop-out and mailroom clerk Diller, who built USA Networks into a multibillion-dollar entertainment business.
Diller, whose TV career began at ABC, is credited with unleashing the concept of the TV miniseries in the mid 1960s. He became chairman of Paramount studios in 1975 where he left to join Fox Studios 10 years later. At Fox, he was involved in helping the then troubled studio revive itself as well as take part in the launch of Fox as the US's fourth major TV network.
Messier confirmed last week that discussions were taking place, saying: "Discussions have been ongoing for several months between Vivendi and USA Networks with a view to optimising synergies in the entertainment area."
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