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Round 2: NBC Still in Front

Aug 25, 2003  •  Post A Comment

Vivendi Universal is entering the home stretch of the protracted sale of its U.S. entertainment assets, with GE’s NBC division touted as the suitor best positioned to win the auction.
John Malone’s Liberty Media and an investment group led by Vivendi Vice Chairman Edgar Bronfman Jr. also submitted revised second-round offers, although indications are that none came close to Vivendi’s price demand of $14 billion for a collection of assets that includes a film studio, theme parks, a television production company and cable channels USA, Sci Fi and Trio.
The French conglomerate’s board next meets Aug. 26 to consider the bids submitted by the Aug. 18 deadline.
Beefing Up
Late last week Mr. Bronfman’s team was feverishly trying to beef up its bid in a last-minute attempt to offer a credible alternative to NBC, including the possibility of more cash. A Bronfman spokesman confirmed that the team is engaged in high-level talks with Vivendi, but declined to say whether the group would sweeten its offer. He also declined to confirm reports stating Mr. Bronfman’s bid is around $12 billion, including $8 billion cash.
NBC’s offer doesn’t include any cash up front. Instead, the network is proposing to combine VUE’s assets with NBC’s to form a new company, of which Vivendi would own a minority stake (25 percent or less) that it could later turn into either cash, stock in a new public company or shares of GE.
Mr. Bronfman’s team, meanwhile, is using a combination of debt, private equity and the value of three cable channels owned by one of its key partners in the offer, Cablevision Systems’ Rainbow Media Holdings unit, to put together a deal under which Cablevision would own a stake in a new company that would include the Rainbow assets along with VUE’s properties.
Officials at both NBC and Vivendi declined to comment.
Tricky Process
With the drawn-out process nearing an end, attention will soon turn to the issue of integrating the VUE assets with their new owner, which could be even trickier than it was to find a buyer. Indeed, all of the obvious synergies could mean little if disparate corporate cultures can’t be melded.
Some have observed that for all of NBC’s success in broadcast television, it wasn’t clear whether that would translate to the high-risk movie business. Some VUE insiders also expressed moderate concern that as a GE unit, NBC might be prone to more process and protocol than was usual at VUE. Another issue could be NBC’s lack of experience in the international marketplace, where VUE has interests, including theme parks.
`A Different Model’
“NBC is a very domestic company with nothing outside the U.S.,” said one person familiar with VUE. “This is a very different model.”
GE, of course, is a very international company with operations all over the globe. A person close to NBC stressed that it was entirely too early to begin considering integration issues, as no deal has yet been signed.