June 28, 2003
http://www.nytimes.com/2003/06/28/bu...28VIVE.html?th
NBC Is Said to Be Pressing Vivendi
By BILL CARTER
Intent on surviving the first cut in the bidding for Vivendi Universal's entertainment assets, NBC is seeking to reaffirm the seriousness of its proposal for a joint venture, according to senior executives close to NBC's strategy.
The executives said that the company had made it clear in discussions with Vivendi that it was enthusiastic about its bid — which would combine its television assets with Vivendi's cable and TV production businesses — and intended to be aggressive in pursuing it to a conclusion.
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To underscore the point, NBC is assuring Vivendi that it will happily accept the company's film studio, an asset whose unpredictable annual performance had been presumed to be unappealing to NBC's parent, General Electric.
And Jeffrey R. Immelt, the chairman of G.E., is prepared to meet with the chairman of Vivendi, Jean-René Fourtou, in Paris sometime in the next week to 10 days, executives who have been briefed on the men's schedules said. Mr. Immelt is not traveling to Paris specifically to meet with Mr. Fourtou but will be in Europe on previously scheduled business. He is now expected to add a meeting with Mr. Fourtou "to show the NBC colors," one executive said.
Over the last several days, details of plans by other potential bidders, including Metro-Goldwyn-Mayer and Viacom, have surfaced in news reports. NBC executives were apparently eager to ensure that their own position not be eroded by any of the proposals.
Many of the executives involved in the bidding process expect Vivendi to pare the suitors to as few as three in the next week or two. At that point, the remaining bidders will commence rounds of due diligence, examining the Vivendi assets. To retain as many as six bidders at the due diligence stage would be unwieldy and unappealing for many of the companies because of the expense involved, a senior executive from one of the bidding companies said.
Unlike several of the other bidders — which also include John C. Malone's Liberty Media; a group led by Edgar Bronfman Jr.; and another by the investor Marvin Davis — NBC is promising no cash in its proposal to Vivendi.
Liberty is presumed to be the leading candidate because of the likelihood that it will include the most cash in its offer.
NBC is offering instead a strategic merger, proposing a deal that would create a joint venture, with NBC as the majority partner. NBC would marry its assets, which include the broadcast network as well as cable channels like CNBC, MSNBC and Bravo, with Vivendi's entertainment assets, which include a television production studio, the cable channels USA and Sci-Fi and the Universal film studio.
NBC executives have concluded that any bidder who puts up enough cash is likely to win the auction. Still, NBC's executives say that they think that their bid has more of a chance than it would have had six months ago because Vivendi is less desperate for liquidity, and a combination with NBC would be a close fit, one executive said.
Among the reasons the network has cited to Vivendi, the executive said, is that Universal's prime television asset, the three "Law and Order" drama series, would find maximum value if NBC acquired the company because the network already broadcasts all three shows. To sell them off in pieces to other networks "would not optimize their value," the executive said.
The film studio has long been considered an impediment to NBC's acquisition because of the volatility of the movie business and G.E.'s historic reluctance to take on any expensive acquisition that could not be guaranteed to be either first or second in its competitive fields.
But NBC is now willing to take on the studio, the executive said, because it has come to believe that "the risk on movies is far less than it was and the volatility has been reduced."
David Londoner, the longtime media analyst who recently retired, said that conclusion was at least partly valid.
"The way studio accounting is done now is much more conservative, and that has contracted some of the volatility," he said, adding: "It's also true that studios simply cost a lot less now. They used to be sold for multiples of profits that were ridiculous."
The executive said the network was also more prepared to accept the risk the movie studio might present because of the recent experiences of all broadcast networks with professional sports contracts, most of which have become enormous money losers.
The executive said NBC also thought that film studios had a potentially lucrative new market in the release of DVD's of old movies. Universal has an extensive library of such films.
