Biggest Deal in 2003: NBC Snags Universal

Dec 22, 2003  •  Post A Comment

In the business of media, 2003 might best be described as a year ruled by simplicity and consolidation.
A slowly recovering economy and the war in Iraq proved no match for a handful of companies interested in either getting bigger or simplifying the ownership structure of assets in which they own a stake. Indeed, it seemed as if a weak economy provided the impetus for companies to get deals done, on the assumption that straightforward ownership structures or more assets in the stable provide protection against an ever-changing market.
Nowhere was that more apparent than in the proposed $14 billion merger of General Electric’s NBC and Vivendi Universal Entertainment. The all-stock deal, if approved by regulators in the United States and Europe next year, would marry the last of the television networks not tied to a media company and the last remaining film studio without a broadcast distribution mechanism and create a fresh competitor to media giants such as Time Warner, Viacom and News Corp.-all of which have a presence across most major forms of media.
The new company, to be called NBC Universal, will certainly be a powerhouse. In addition to owning a revenue-leading broadcast network, the new entity will combine NBC’s cable and television production assets with VUE’s properties, which include cable channels USA Network, Sci Fi Channel, Universal’s TV syndication and a film studio that has had a good run the past couple of years. Perhaps most important: NBC will finally own Universal Television’s “Law & Order” franchise, which has been a crucial piece of its prime-time lineup.
Another transaction that is likely to change the television landscape is the purchase by Rupert Murdoch’s News Corp. of a controlling stake in Hughes Electronics, the parent of No. 1 satellite operator DirecTV. The transaction, which will cost $6.6 billion for a 34 percent stake in Hughes and which was poised to receive regulatory approval at press time, will bolster News Corp.’s role as a dominant global satellite company and immediately put Mr. Murdoch in control of the biggest satellite operator in the United States.
The deal-making hasn’t been exclusively at the corporate level. A handful of cable networks has also been at the center of 2003’s consolidation push, as stakeholders look to simplify these nets’ ownership structures.
It began in May, when Time Warner opted to sell its 50 percent stake in the Comedy Central cable channel to Viacom, which owned the other half, for $1.5 billion. Then, in July cable giant Comcast sold for $7.9 billion its 57 percent stake in shopping channel QVC to Liberty, which owned a 43 percent stake in the network. And in December Comcast struck a deal to acquire Tribune’s 8.6 percent stake in the Golf Channel for $100 million, giving the cable operator complete control of the golf-themed network.