VU IN A DILLER PICKLE

Vivendi Universal Chief Executive Jean-Rene Fourtou would like the Hollywood veteran to assume a leadership role in the company’s entertainment division if it is spun off into a public concern.

Diller, already President of Vivendi Universal Entertainment, would bring instant credibility with investors to any new media company if he were involved.

The Wall Street Journal has already reported that VU will likely hold on to its entertainment assets because of how devalued they are at the moment. Diller’s leadership would allow the Paris-based conglom to put some distance between itself and the highly volatile worlds of filmmaking, TV and theme parks.

But Diller’s financial advisors are urging him to stay focused on his primary business, USA Interactive and its rising offshots, Home Shopping Network, Ticketmaster and Expedia.com.

Will the one-time Paramount and Fox Chairman be lured by the romance of running a major studio again?

Fourtou plans to outline the VU assets he intends to put on the block to meet the approximately $10 billion target he has set for paying off debt. The company will unload its Canal Plus Technologies unit, which makes pay-TV software, and its book publishing division, including the Boston-based Houghton Mifflin Co.

Back in May, when Diller sold USA Networks’ TV and film assets to VU and reorganized the rest of his holdings as USA Interactive, he turned down the opportunity to make Universal Music Group part of his unit, citing the various ills currently plaguing the music business. At the time, he was given a 1.5% stake in Vivendi Universal Entertainment worth a minimum of $275 million, while USA Interactive was given a 5.44% stake in the company.

To protect the value of USAI, Diller has repeatedly stated he would not merge or involve the company. In that case, Fourtou would consider merging VU Entertainment with one or more strategic partners, such as NBC, Viacom, DreamWorks or John Malone’s Liberty Media.

There’s no word whether UMG would also go on the block, or if anyone has deep enough pockets to invest in a music company at this point in time, even the largest and most successful in the world. Strange days indeed.