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Vivendi Set to Discuss selling NBCU Stake


The scene could soon be set for General Electric(GE) to strike its rumored deal to sell its NBC Universal assets to cable operator Comcast (CMCSA), sources tell BusinessWeek. French telecommunicatons and entertainment company Vivendi is expected to discuss the sale of its 20% stake in NBCU at a scheduled October 14 board meeting in Paris. GE executives have been told that Vivendi executives are ready to sell their company?? stake, which would set in motion a GE commitment to pay Vivendi what investment bankers now estimate would be upwards of $6 billion.

Under its 2003 agreement to buy the Universal studio from Vivendi, GE gave the French company the right to sell its 20% stake back at ??air market value?each year in November, starting in 2006. Until now, Vivendi has resisted, although the company has recently been seeking acquistions to expand its worldwide telecommunications holdings. In September, it announced a $2.9 billion offer to buy Brazilian teleco GVT.

How much Vivendi will seek for its stake in NBCU is likely be the hot-button issue. Analysts have generally estimated the GE studio, broadcasting and theme park unit to be worth $20 billion to $24 billion, making the Vivendi piece worth just under $5 billion. But at least one knowledgeable media investment banker believes that Comcast’s interest in acquring control has added perhaps a 30% premium, pushing NBC’s value to as much as $30 billion. That would hike the value of Vivendi’s stake to $6 billion.

“If I was Vivendi asking for $5 billion last week, I’m asking for $6 billion, and maybe closer to $7 billion if it looks like GE wants to get that deal done badly,” says the media dealmaker. Until Comcast came calling, GE was considering an IPO to raise money to pay Vivendi.

The deal on the table now would have Comcast transfering its existing entertainment assets, including the E! Entertainment channel, into a joint company with NBCU’s assets. Comcast would also provide GE with $6 billion in cash to pay Vivendi. GE would transfer $12 billion in debt from its balance sheet to the newly created private company. Comcast would control the new company with a 51% stake. GE have the remaining 49%.


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