Battle over VUE assets ends in NBC's favour

MUMBAI: The protracted three-month old battle between various media firms over the assets of Vivendi Universal Entertainment has come to a close. As expected, NBC has walked away with the spoils.

At the time of filing, the two parties were in a meeting to ink a letter of agreement for a deal which will reportedly bring in $3.8 billion in cash to the cash-strapped Vivendi and an additional $1.2 billion in assumed debt. Reuters has valued the deal for Vivendi at approximately $13.6 billion.

The new entity is to be called NBC Universal, making it the third largest media company in the world after Walt Disney Co. and Viacom in that order. Rupert Murdoch's News Corp. Ltd. will now come in at Number 4.

Vivendi will merge assets including Universal film studios and the five theme parks, as well as the USA and Sci-Fi TV networks - with NBC.

All this of course indicates that Vivendi is keen on staying in the media business for a while longer. Earlier, there was talk that it would restrict itself to just the music segment. The broadcaster's parent General Electric will have a 80 per cent stake in the company. The troubled French media group will have the minority 20 per cent stake. Since Vivendi has reportedly valued its 20 per cent stake in the future NBC Universal group at $9 billion, the total value of the company therefore stands at $ 45 billion.

The new company is expected to generate $13 billion in annual revenues and $3 billion in operating cash flow.

As reported earlier by, the deal will enable NBC to look beyond just the other broadcast networks ABC, CBS, Fox and take on their owners Disney, Viacom and Rupert Murdoch's News Corporation. Analysts have noted that the deal will allow NBC access to more programming without difficult negotiations with its competitors. Reports indicate that the deal makes sense in the US where the new regulatory environment no longer separates production and broadcasting. The proposed merger, which is expected to be completed by end-September is also expected to pass through European Union regulatory scrutiny without a hitch.

It is however doubtful as to whether NBC sees a great deal of value in the theme park arena. In all probability it will operate them until an attractive exit is found.

While NBC has been in the forefront for a while now the former owner of Universal Edgar Bronfman Jr who sold out to Vivendi three years ago and who is on Vivendi's board of directors had still held out hopes of a deal going in his favour. He has however finally resigned to losing out. MGM was one of the first parties to pull out of the race for the VUE assets. The other serious suitiors at one time or another included Liberty Media, Viacom and cable company Comcast.

But this does not mean that Bronfman has totally de-linked from making a play for Vivendi assets. Still up for grabs is Universal's music assets Universal Music Group which is not part of the current deal. It is seen as a straight play with none of the complexities that this deal came with and will be a more straightforward pitch for Bronfman.

Also Read:

NBC expected to clinch deal for VUE assets

NBC emerges as front runner in Vivendi US showbiz deal

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