GE GETS EXCLUSIVE BARGAINING RIGHTS FOR VIVENDI ASSETS
Vivendi’s drawn-out effort to sell its U.S. film and TV assets surged forward Tues. with the announcement that it had signed an agreement with GE to enter into exclusive negotiations to merge those assets with GE’s NBC. The deal would create the world’s 6th-largest media company.
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Vivendi said the new company would have the broadest reach of any TV media company. GE owns the No.1 TV network, NBC, as well as cable networks CNBC, MSNBC and Bravo. Vivendi owns USA Network, the Sci-Fi Channel, Universal Pictures, Universal TV, Telemundo and interests in 5 amusement parks. Vivendi isn’t selling Universal Music Group, the world’s biggest record company.
GE would control 80% of the new company and Vivendi 20%. GE Vice Chmn. Robert Wright would head the company. Most details of the proposed deal haven’t been disclosed, but Vivendi said it would receive $3.8 billion through a plan allowing it to sell its stake back to GE over time and that GE would assume $1.6 billion of Vivendi Universal Entertainment (VUE) debt. Wright said the new company would be poised for tremendous short- and long-term growth. “The assets of NBC and VUE are extremely complementary,” Wright said, “and the combination of VUE’s rich content library, superior television production facility and attractive cable brands with NBC’s industry-leading broadcast network and well-established cable properties could benefit shareholders for years to come.”
Vivendi has been trying to sell the assets for months, reportedly in an effort to reduce the debt the one-time utility company piled up when it began transforming itself into an international entertainment company. Vivendi Chmn. Jean-Rene Fourtou said: “This proposed transaction would mark the beginning of a new era for VU, transforming us into a company with stronger assets and a healthier financial base.”
Other companies, including Liberty Media and Viacom, had expressed early interest in bidding on Vivendi’s entertainment assets, but dropped out after deciding the price was too high. Most recently, GE had been competing with an investor group led by Seagram CEO and Vivendi board member Edgar Bronfman. That group included Cablevision Systems, Thomas Lee Partners and The Blackstone Group. “Cablevision, Thomas H. Lee and Blackstone have been extraordinary partners and we believe ours was a compelling proposal for Vivendi Universal,” Bronfman said. “Now that VU’s board has decided to enter into exclusive negotiations with GE/NBC, I am hopeful that VU’s strategic direction will reward its employees and shareholders for their patient and steadfast support.” -- J.L. Laws