Updated from 11:36 a.m. EDT

Two debt-plagued media titans took steps to shore up their empires Tuesday -- or at least put some of their bigger headaches behind them.

Vivendi ( V), the French conglomerate frantically trying to unwind assets acquired over a two-year buying binge under its previous chairman, reportedly is in preliminary talks with John Malone's Liberty Media ( L) to merge some of their cable-programming interests.

According to several published reports, the deal would facilitate an eventual initial public offering of Vivendi's entertainment operations, perhaps when IPO market conditions improve and pressure on Vivendi to raise cash eases. The deal would give Liberty a major stake in the combined entity.

Other press reports say Vivendi's board is looking at selling its 86% stake in Universal Entertainment through an IPO of up to $5 billion.

Vivendi said it plans to work down 10 billion euros ($9.8 billion) of debt through asset sales in the next two years, with half of that to be done in the next nine months. Its total debt is 35 billion euros.

Shares of Vivendi rose 63 cents, or 5%, to end the day at $12.56.

Separately, AOL Time Warner ( AOL) is reportedly close to a deal to buy out AT&T's ( T) 27% stake in the companies' Time Warner Entertainment venture for $9 billion. The deal would give AOL full ownership of Warner Bros. Studios and the cable networks HBO, Court TV and Comedy Central.

The restructuring "should remove a strategic overhang and a cloud of uncertainty around AOL Time Warner's stock. In addition, a deal would likely simplify the capital structure," J.P. Morgan analyst Jason Bazinet wrote in a research report.

AT&T inherited its stake in the operation through the acquisition of cable company MediaOne in 2000. AOL and AT&T have been trying to find a way to cash AT&T out of Time Warner Entertainment ever since. Comcast ( CMCSK) is involved in the talks as well because it's due to inherit the stake in Time Warner Entertainment as a result of its pending acquisition of AT&T's cable systems.

"Technically, AOL is being forced into this," said Dan Chung an analyst with CIBC World Markets. "AT&T and Comcast have the right every 18 months to monetize their stake in the partnership."

Chung believes that the success of the deal will hinge on how many of AT&T 's 22 million subscribers AOL will have access to initially. "After speaking with many investors about this issue the past couple weeks, it is our sense that a cable deal for at least 5-7 million subscribers would satisfy investors and help to offset the dilutive impact of the cash and stock payment," Chung said.

Analyst James Goss of Barrington Research said he likes the proposed deal for AOL. "AOL wants access to the cable system for its high-speed Internet access," he said. "And it would simplify things to get Warner Brothers and HBO at the same level."

AOL closed up 3 cents at $13.36. AT&T added 4% to $11.18.

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