By Indiewire | Indiewire September 3, 2003 at 2:0AM
NBC and Vivendi Universal Entertainment Intend to Merge, With General Electric at the Helm
by Eugene Hernandez
General Electric is making a play in the film business, aiming to create another mega entertainment conglomerate. The corporation has entered into exclusive negotiations with French company Vivendi Universal with the intention of merging its NBC TV network with Vivendi Universal Entertainment (VUE). GE and Vivendi Universal have signed a pact paving the way for the combination of the two entertainment outfits, a deal that would put the new company on par with the entertainment operations of Disney, Fox, AOL-Time Warner, and Viacom, owners of the other major American television networks which also run Hollywood studios. Both companies issued statement on Monday's detailing their enthusiasm for the merger.
"This potential merger would be good for both companies' shareowners, creating a global leader in the media industry. The new company would be led by a tremendously successful management team and guided by Bob Wright, one of the most experienced executives in television," said Jeff Immelt, chairman and CEO of GE, in a prepared statement. "It has been a pleasure to work with Jean-Rene Fourtou and the Vivendi management team."
Vivendi Universal Entertainment owns Universal Pictures and Focus Features, which are leading producers and distributors of blockbuster and specialized movies. In the television arena, NBC would combine its TV channels, including the recently acquired Bravo, with Universal's USA Network, Trio, Sci-Fi Channel, not to mention the Spanish-language broadcaster, Telemundo. GE will own 80 percent of the new company, while Vivendi will maintain 20 percent ownership.
"This transaction would create a media company that is superbly positioned to generate substantial growth both now and in the long term. The assets of NBC and VUE are extremely complementary, and the combination of VUE's rich content library, superior television production facility, and attractive cable brands with NBC's industry-leading broadcast network and well-established cable properties could benefit shareholders for years to come," said G.E. vice chairman Bob Wright in a prepared statement. "This merger would give us a unique opportunity to extend NBC's legacy as the nation's first broadcast company well into the coming age of digital media."
The merger would mark a major shift in Vivendi Universal's entertainment strategy. The French utility company Vivendi acquired Universal from Seagram but recently decided to drop its entertainment efforts and seek a suitor. While a number of other companies were in the running to acquire VUE, including Viacom, MGM, Liberty Media and even former Seagram/Vivendi exec Edgar Bronfman (in a bid with Cablevision), the Vivendi board's decision to choose a final player had been anticipated.
"During the past few weeks I have had the opportunity to work with Jeff Immelt, Bob Wright, and their team. They certainly deserve their strong reputation as extremely talented managers. Together we have developed a plan to create an exceptional media company, which would rank among the most profitable in the U.S.," said Jean-Rene Fourtou, chairman and CEO of Vivendi Universal, in a prepared statement. "VU is proud that it would have a 20 percent stake in such a company and I am personally happy to have the opportunity to merge VUE into an entity that will provide VUE with the complementary assets and means to develop its operations to the fullest."
In the announcement yesterday, the companies indicated that they will work towards a deal, with steps including a definitive agreement, due diligence, and regulatory approvals.