NBC leads suitors for Vivendi's entertainment unit
By Michael McCarthy,USA TODAY
NEW YORK — NBC is emerging as the strongest contender to walk away with Vivendi Universal's U.S. entertainment properties.
The General Electric-owned (GE) network is willing to add a small amount of up-front cash to its offer to merge NBC with the Universal movie and TV operations and USA Networks cable business collectively known as Vivendi Universal Entertainment (VUE), according to sources with knowledge of the talks.
NBC would have majority control. Vivendi could sell its minority stake to raise cash after a time period still being negotiated, the sources say.
An NBC team led by Robert Wright, NBC chief executive and GE vice chairman, met with a Vivendi Universal group led by CEO Jean-Rene Fourtou in New York on Wednesday. An alliance with a studio would help NBC profit from shows it airs when reruns are sold. This fall, NBC will own a stake in 42% of its prime-time shows vs. 50% each for ABC and Fox and 85% for CBS.
USA Networks would complement NBC's cable properties, which are heavy on news, with MSNBC and CNBC, but light on entertainment.
Neither NBC nor Vivendi Universal would comment on the ongoing talks.
Paris-based Vivendi put VUE on the block because it has been in a cash crunch for more than a year. Former CEO Jean-Marie Messier's effort to turn Vivendi into an entertainment giant left it with $42.6 billion in debt at the end of 2001. Messier was ousted in July 2002, and Fourtou whittled the debt to $13.8 billion at the end of 2002.
The company had hoped to close bidding by Monday, but it appears talks will continue.
Thursday, potential bidder Comcast, the No. 1 cable company, said it would not bid on VUE. Sources close to the talks said it balked at the price.
However, later in the day it said it was exploring an alliance involving both companies' cable TV channels and Vivendi's programming to create new channels and services.
Sources close to the talks said Vivendi approached Comcast about such a possibility after Comcast dropped out, leading some to speculate Vivendi is setting up contingency plans should its auction fail to bring an acceptable offer. Vivendi has said it is still considering an initial public offering for VUE.
In recent weeks, MGM's Kirk Kerkorian and Liberty Media's John Malone have dropped out of the bidding.
Still in the mix are Viacom, said to be interested mostly in the cable assets, and a consortium led by former Seagram chief Edgar Bronfman Jr., who originally sold Universal to Vivendi.
Vivendi probably will decide in September which offer, if any, it will accept.
Contributing: Reuters
Go NBC!
