Vivendi Universal has approved a $10-$12 billion deal to purchase Barry Diller's USA Networks and make the media mogul head of Universal Studios, according to various news outlets.

Under terms of the deal, Diller would head a new Vivendi-controlled company that would combine its Universal Studios theme parks and movie studio with his cable networks, television production unit and film company. In turn, USA Networks will be renamed USA Interactive.

The deal would reunite Universal with assets that former owner Seagram sold to Diller in 1998 for $4.1 billion. Universal, which has owned 43% of USA Networks, now would have controlling interest in USA's entertainment business.

"When [Vivendi Universal Chief] Jean-Marie Messier and I started to discuss the possibilities between Vivendi Universal and USA, we were mindful of two tasks-that the solution had to be fair and balanced for both," Diller said. "Easily said, but incredibly difficult to achieve given the multiple conflicts that existed. We have constructed a transaction that while complex, has at its essence the realization of those goals.

"In addition to my role as the Chairman and CEO of USA Interactive, I have agreed to serve as the Chairman and CEO of the newly constituted joint venture, Vivendi Universal Entertainment," he said. "I will serve at the pleasure of both Mr. Messier and myself. I will have no employment contract. I will be paid no salary...USA Interactive has a minority, but significant stake, in the joint venture, and I personally have a minority stake in the joint venture."

The company expects that the focus on integrated interactivity afforded by the merger will expedite its march, both through internal growth and through acquisition, from enabling 9% of all interactive commerce to 20% over the next few years. This would make USA Interactive a clear leader in interactive commerce and the only company focused on integrating interactive assets across multiple lines of business. Additionally, Vivendi will no longer have veto rights with respect to transactions valued in excess of 10% of USA's market capitalization. As a result, USA will have corporate autonomy.

The agreement does not include Universal Music Group. VU plans to keep the world's largest music company and its publishing operations separate. And USA is not selling its Home Shopping Network and Internet companies, which include Ticketmaster.

VU's Diller move comes on the heels of Edgar Bronfman Jr.'s resignation last week.

By making this move, VU hopes that Diller can expand its presence in the United States to compete with the likes of AOL Time Warner, Disney and Viacom.