Media giants dance around sales stake

GE, Vivendi, Comcast shimmy up to NBC U

It’s a three-way media dance that has Hollywood and Wall Street riveted.

General Electric is in the tricky position of negotiating simultaneously with Vivendi and Comcast Corp. on mega-deals surrounding NBC Universal that are separate but also inextricably linked. The shimmying among the sides is likely to go on until at least Nov. 15, the start of the contractually mandated three-week window in which Vivendi has to give GE a yea or nay on whether it plans to sell its 20% stake in NBC U.

GE is certainly signaling that it is ready to begin its exit out of showbiz, nearly 25 years after it acquired NBC. And Vivendi is giving indications that it’s ready to unload the minority stake that it has held since selling Universal to GE in 2004.

Up until a month ago, the betting internally at NBC was that Vivendi would take it down to the wire but ultimately decide to hold on to the stake rather than sell in a down market. But that was before Comcast entered the picture in a serious way.

At present, GE is pursuing a pact with Comcast that would have the cable giant assume 51% ownership of NBC U. Comcast would contribute its cable channels, including E! and G4 and several regional sports cablers, and $4 billion-$6 billion in cash to create a new-and-improved NBC U. Part of this deal would also give GE the right to sell more of its stake to Comcast over a seven-year period.

But GE’s plan with Comcast hinges on Vivendi unloading its stake at a price that GE and Comcast can stomach. Word surfaced in the Wall Street Journal last week that GE and Vivendi were about $500 million apart on the pricetag for a sale. In the grand scheme of mega-mergers, $500 million is pocket change, and that stoked optimism that a three-way agreement would be reached.

Of course, no deal in Hollywood is ever done until a raft of lawyers say it’s done, so there are plenty of wild cards. Vivendi CEO Jean-Bernard Levy has no incentive to tip his hand early while trying to extract the highest price for its 20% chunk. The Comcast deal under discussion values NBC U at around $30 billion. Vivendi is said to see the Peacock more in the $32 billion-$33 billion range.

GE chairman Jeffrey Immelt made what was likely a carefully timed appearance at a tech confab in San Francisco on Oct. 21 in which he seemed to try to dampen expectations of the Vivendi/Comcast scenario sailing through. He did acknowledge that GE is considering multiple options for NBC U, which is a significant change from the “Why would we want to sell?” stance that it has maintained ever since the union of U and NBC in 2004. For a company that makes most of its money building medical devices, jet turbine engines and household appliances, the unit that manufactures movies and TV shows has unavoidably been a bit of sore thumb.

Comcast CEO Brian Roberts, on the other hand, has made no secret of his desire to see his family-controlled firm become a bigger player in the programming arena. Even if Comcast winds up having to kick in a little more cash, the deal under discussion would bring the company wildly attractive assets (USA Network, Syfy, Bravo, CNBC, MSNBC and a film studio to boot) at a bargain-basement price.

And that would be the kind of fancy mogul footwork that Wall Streeters could cheer.

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