Giant General Electric can breathe easier as Vivendi agreed not to stick the conglom with a massive payout in exchange for Viv’s stake in NBC Universal.
After playing coy for weeks, Vivendi said Thursday that it won’t exercise its right to sell a chunk of its 20% stake in NBC U to parent GE — a move that could have cost the conglom some $3 billion. Instead, the two companies have extended their NBC U partnership until 2017.
Under the original contract, Vivendi had the right to sell a portion of its 20% stake in NBC U back to GE in January. That total stake is worth about $8 billion.
Under the revised terms, Vivendi will have a window each November to unload its stake in NBC U through an initial public offering. GE will have an annual option to buy Vivendi’s stake starting in May 2011.
Speaking at an investor conference in November, Vivendi finance chief Jacques Espinasse had said: “Is now the appropriate time to do it, in January 2007? We have an answer to that question, but I’m not going to give it today.”
Vivendi and GE merged their entertainment assets in 2004. The new company, comprised of Universal Studios and the NBC television network, is 80% owned by GE.
GE was by all accounts petrified at the prospect of such a large payout, but might have pushed for an IPO instead.
That could have been risky for Vivendi too. The French conglom had to carefully consider whether it’s an auspicious time to take NBC U public. NBC is still smarting after a few years in the doghouse but seems to be bouncing back. Still, it’s probably wiser to hold off on an IPO until the turnaround looks assured.
Vivendi previously agreed, in early 2006, to delay exercising its right to sell part of its 20% stake.
In mid-October, NBC announced a new strategic plan dubbed 2.0 that will entail 700 layoffs and $750 million in cost cuts under heir apparent Jeff Zucker.