Now that Vivendi Universal has awarded exclusive negotiating rights for the acquisition of its American entertainment assets to NBC and corporate parent General Electric, we find ourselves pausing to admire the steady, disciplined strategy the network used to emerge from a cluttered field of bidders and ultimately gain the upper hand.
There is no assurance NBC will make the deal in the end, because there are still a lot of loose ends. However, we think this is one time the deal does make sense.
TelevisionWeek is no fan of the “bigger is better” approach to media ownership. But NBC-Universal seems to us to be something other than a media giant getting bigger for the sake of getting bigger. This acquisition appears to be a case of a large corporation playing it smart and creating a critical mass of assets that make sense under a single corporate umbrella. This positions the new entity to become a true global powerhouse.
The acquisition of Universal’s film and TV portfolio and other assets (not including music) will strengthen NBC/GE’s position in a world of increasingly large media firms by giving it, among other things, film and television production studios in Universal that are comparable to those affiliated with network rivals ABC (Disney) and CBS (Paramount). GE and NBC also gain cable channels USA, Sci Fi and Trio, which will fit nicely into the corporate family.
This is not the first time NBC has moved decisively to position itself for future growth. The moves into cable TV with the creation of CNBC and MSNBC and the acquisition of Telemundo are among the reasons NBC is a buyer at this point and not another troubled company looking for a buyer. With the Vivendi acquisition, NBC is redefining itself once again as a more fully integrated operation. The deal addresses one of the few real weaknesses in NBC’s long-term outlook by beefing up the production side, for both English- and Spanish-language programming. Even the entry into the high-risk movie business is manageable when one has strong management, cost controls and multiple markets in which to sell the films well beyond their theatrical runs.
Challenges remain. The investments and tax complications involving Barry Diller, John Malone and the Bronfman family all need to be worked out. However, we predict those will be handled as professionally and with the same kind of fiscal discipline and common sense that have marked the NBC/GE approach so far.
It’s no accident that NBC has been one of the most consistently profitable media concerns in recent years. Company executives, led by Chairman Bob Wright, know what they’re doing. They’re proving it again in the Vivendi Universal situation.