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NBC Wins Auction for Vivendi Assets
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By Merissa Marr and Noah Barkin
PARIS (Reuters) - The NBC television network won Vivendi Universal's marathon show business auction on Tuesday with a merger plan to create a new entertainment industry giant valued at more than $40 billion.
NBC, a unit of General Electric, clinched exclusive negotiating rights to fine tune a deal that gives it control of a major media player that would rival global heavyweights such as Walt Disney Co and Viacom.
If concluded, the deal would bring 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.
"Together we have developed a plan to create an exceptional media company, which would rank among the most profitable in the U.S.," said Vivendi Chairman and CEO Jean-Rene Fourtou.
After months of deliberations over its future in Hollywood, Paris-based Vivendi said its board had decided to eliminate a rival consortium led by Edgar Bronfman Jr. and create an entertainment giant to be run by NBC CEO Bob Wright.
General Electric will control 80 percent of the merged entity while Vivendi will keep its hand in Hollywood with a 20 percent stake. Vivendi Universal Entertainment shareholders will also receive a $3.8 billion "cash consideration."
One source close to the deal said Vivendi valued its 20 percent stake at $9 billion, implying a valuation of the merged entity of around $45 billion.
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 the Vivendi assets.
Vivendi shares ended up 4.1 percent at 16.60 euros in Paris and rose $1.16 to $18.06 in New York, where markets had been shut on Monday for Labor Day. GE shares were up 1.6 percent at $30.04 at 1831 GMT.
BIG BLOW FOR BRONFMAN
NBC has long been Vivendi's favored choice, but Vivendi's vice chairman Bronfman fought hard to stay in the race over the past week with a bid worth around $13 billion.
"Edgar Bronfman is bewildered," said one source close to the auction. "But there was little hope of swaying Vivendi today."
In the end, Vivendi had to choose between Bronfman's offer of upfront cash to cut its debts or the prospect of a better return in the long run under an NBC deal.
NBC strengthened its hand after firming up the cash element of its deal in recent weeks. 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.
The partnership would have combined proforma revenues of $13 billion in 2003 and underlying earnings before interest, taxes depreciation and amortization of about $3 billion.
While some sources suggested closing a deal may be difficult given GE's reputation as an inscrutable negotiator, Fourtou said he was confident a deal could be closed by the end of September.
Losing out to NBC deals a personal blow to Bronfman, who was 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 at Vivendi on hold to head a team including cable company Cablevision Systems Corp. and several private equity firms.
However, Fourtou said on Tuesday he saw no direct role for Bronfman in the new merged company. (Additional reporting by William Emmanuel, Kerstin Gehmlich and Tim Hepher in Paris, Kirstin Ridley in London and Derek Caney in New York)
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How will this affect Disney and Universal.
NBC Wins Auction for Vivendi Assets
1 hour, 16 minutes ago Add Top Stories - Reuters to My Yahoo!
By Merissa Marr and Noah Barkin
PARIS (Reuters) - The NBC television network won Vivendi Universal's marathon show business auction on Tuesday with a merger plan to create a new entertainment industry giant valued at more than $40 billion.
NBC, a unit of General Electric, clinched exclusive negotiating rights to fine tune a deal that gives it control of a major media player that would rival global heavyweights such as Walt Disney Co and Viacom.
If concluded, the deal would bring 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.
"Together we have developed a plan to create an exceptional media company, which would rank among the most profitable in the U.S.," said Vivendi Chairman and CEO Jean-Rene Fourtou.
After months of deliberations over its future in Hollywood, Paris-based Vivendi said its board had decided to eliminate a rival consortium led by Edgar Bronfman Jr. and create an entertainment giant to be run by NBC CEO Bob Wright.
General Electric will control 80 percent of the merged entity while Vivendi will keep its hand in Hollywood with a 20 percent stake. Vivendi Universal Entertainment shareholders will also receive a $3.8 billion "cash consideration."
One source close to the deal said Vivendi valued its 20 percent stake at $9 billion, implying a valuation of the merged entity of around $45 billion.
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 the Vivendi assets.
Vivendi shares ended up 4.1 percent at 16.60 euros in Paris and rose $1.16 to $18.06 in New York, where markets had been shut on Monday for Labor Day. GE shares were up 1.6 percent at $30.04 at 1831 GMT.
BIG BLOW FOR BRONFMAN
NBC has long been Vivendi's favored choice, but Vivendi's vice chairman Bronfman fought hard to stay in the race over the past week with a bid worth around $13 billion.
"Edgar Bronfman is bewildered," said one source close to the auction. "But there was little hope of swaying Vivendi today."
In the end, Vivendi had to choose between Bronfman's offer of upfront cash to cut its debts or the prospect of a better return in the long run under an NBC deal.
NBC strengthened its hand after firming up the cash element of its deal in recent weeks. 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.
The partnership would have combined proforma revenues of $13 billion in 2003 and underlying earnings before interest, taxes depreciation and amortization of about $3 billion.
While some sources suggested closing a deal may be difficult given GE's reputation as an inscrutable negotiator, Fourtou said he was confident a deal could be closed by the end of September.
Losing out to NBC deals a personal blow to Bronfman, who was 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 at Vivendi on hold to head a team including cable company Cablevision Systems Corp. and several private equity firms.
However, Fourtou said on Tuesday he saw no direct role for Bronfman in the new merged company. (Additional reporting by William Emmanuel, Kerstin Gehmlich and Tim Hepher in Paris, Kirstin Ridley in London and Derek Caney in New York)
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How will this affect Disney and Universal.
