NASCAR NETWORK NBC Wins Vivendi Assets

PARIS September 2, 2003; Merissa Marr and Noah Barkin writing for Reuters reported that the NBC television network, a unit of General Electric, won Vivendi Universal's show business auction on Tuesday with a multi-billion dollar merger to create a new entertainment industry giant.

The NBC deal brings together assets including Vivendi's Universal Pictures, the Hollywood studio behind "The Hulk" and "The Mummy," and cable television network USA, with NBC's broadcast network and cable channels CNBC and Bravo.

Vivendi, the world's second-biggest media company, said after a board meeting that General Electric would own 80 percent of the merged company while Vivendi would hold 20 percent.

As part of the deal, Vivendi said shareholders of Vivendi Universal Entertainment would receive $3.8 billion of "cash consideration" against a commitment by General Electric to issue its stock as well as a $1.6 billion debt reduction.

After eleventh-hour talks with two contenders, Vivendi held a special board meeting in Paris to vote on eliminating a consortium led by Edgar Bronfman Jr. and approve a preliminary deal with General Electric's NBC for a show business merger.

NBC has long been Vivendi's favored choice after proposing a merger to create a media giant potentially worth more than $40 billion that would vie with U.S. heavyweights including Walt Disney Co. and Viacom.

NBC VS BRONFMAN

The decision brings an end to a long hot summer of negotiations that gripped the media industry and ran up huge bills for an army of advisers as some of Hollywood's biggest egos jostled for assets that include Universal Studios.

Vivendi shares jumped 4.1 percent to 16.60 euros in Paris and more than seven percent to $18.11 in New York, where markets had been shut on Monday for Labor Day.

Vivendi, the world's number-two media company, had been weighing up securing cash in the bank to cut its debts with a sale to Bronfman or keeping a hand in Hollywood and betting on a better return in the long run under an NBC deal.

Vivendi's vice chairman Bronfman fought hard to stay in the race over the past week and remained in negotiations over a bid worth around $13 billion on Monday. However, NBC has maintained an edge throughout.

But closing a deal may not be easy. GE has won a reputation as an inscrutable negotiator with an eagle eye for fine detail.

"A final deal could take months," said one source familiar with the auction.

Losing out to NBC deals a personal blow to Bronfman, who is keen to restore his reputation after merging the Bronfman family entertainment empire with Vivendi three years ago -- only to see the family fortune disintegrate.

Bronfman had put his executive duties as Vivendi vice chairman on hold to head a team including cable company Cablevision Systems Corp. and several private equity firms.