Vivendi may need money for NBC U stake to pay for Brazil deal
A bidding war for a Brazilian telephone company may have provided the last push that Comcast and General Electric needed to get to the handshake point this week on a deal that would see the cabler take a controlling stake in NBC Universal.
The complex joint venture being negotiated between Comcast and GE hinges in large part on whether France’s Vivendi decides to sell its 20% stake in NBC Universal back to GE. On Friday, Gallic telco giant Vivendi triumphed in a two-month battle with Spanish media giant Telefonica for a controlling interest in Brazilian telco provider GVT.
Vivendi’s hot pursuit of the $4.1 billion deal, which gives it a majority stake in the Brazilian telco provider, has Wall Street convinced that Vivendi will use the proceeds from the NBC U stake sale to pay for the GVT deal. Vivendi and GE have been in discussions about the pricetag for Vivendi’s stake for weeks.
Per the terms of its sale of Universal Studios to GE in 2004, Vivendi has a three-week window each year in which it has to inform GE whether it intends to keep the 20% stake, compel GE to buy it back or put it on the market as an IPO. That window opened Sunday.
There have been reports that Gallic telco giant Vivendi, which owns Universal Music Group, has been dissatisfied with the roughly $30 billion valuation that GE and Comcast have agreed on for NBC U, which would value Vivendi’s stake at around $6 billion. But Vivendi may be more inclined to cut a deal now that it is looking at finalizing a more strategic deal for GVT.
“Vivendi’s purchase of GVT is a clear signal they’ll sell their NBC stake,” Emmanuel Soupre, money manager at Paris-based Neuflize OBC, told Bloomberg News on Sunday.
Meanwhile, talks between Comcast and GE continued to move toward the completion of a deal, pending the final word from Vivendi. While the sides are believed to have worked out the broad strokes of the agreement, industry sources cautioned that with so many moving parts, there was no certainty that an agreement could be reached, but the sides were said to be working toward an announcement by the middle of this week.
The deal as outlined would call for Comcast to contribute $4 billion-$6 billion in cash plus its existing cable nets, including E! Style, G4, Golf Channel and several regional sports cablers, to a joint venture with GE. Comcast would have a 51% interest and managing control of the new NBC U, which would take on as much as $12 billion in debt as part of the transaction. GE would have the right to sell back more of its stake to Comcast over the next seven years.
NBC U CEO Jeff Zucker is said to be assured of remaining at the helm of the enlarged company, which would be a cable programming powerhouse, putting Comcast’s channels under the same roof as USA, Syfy, Bravo, CNBC, MSNBC and other Peacock cablers.
Although insiders on both sides of the negotiating table have been quick to affirm Zucker’s role post-merger, that hasn’t quieted biz speculation about how Comcast’s heavy hitters could fit into the NBC U management picture. The enlarged NBC U will have its own board of directors, but Comcast boss Brian Roberts and his lieutenants will undoubtedly exert their influence.
Comcast chief operating officer Stephen Burke previously worked as a senior exec at Disney and as prexy of the ABC broadcast net before joining Comcast in 1998.
Ted Harbert, prexy-CEO of Comcast Entertainment Group, spent 20 years at ABC Entertainment, rising to prexy of the division in the mid-to-late 1990s. Before joining Comcast in 2004, Harbert worked with Zucker at NBC as prexy of the NBC Studios production unit.