For years, NBC’s Robert Wright has been publicly sharing his dreams of expanding his network beyond traditional broadcasting. Now, he’s on the verge of success as he negotiates the final details that would create NBC Universal, the nation’s sixth largest media company.
If completed, the deal would merge NBC's assets—the broadcast network, local stations, the cable channels CNBC and MSNBC and the Spanish-language network Telemundo—with Vivendi’s motion picture and television studios; its cable networks including USA, Bravo, and Sci-Fi; and the Universal Studios theme parks.
It would also be the last of the big three American television networks to become multimedia conglomerates, following CBS’s purchase by Viacom and ABC’s acquisition by the Walt Disney Company.
Under the terms of the Vivendi-NBC preliminary pact, announced last week, Vivendi would own a 20 percent stake in NBC Universal and immediately receive $3.8 billion in cash through a complex transaction involving a commitment by parent General Electric to buy part of Vivendi’s stake in the future. GE will also assume $1.6 billion of Vivendi’s debt.
Robert Wright, current chairman of NBC and GE’s vice chairman, would lead the new company. As a minority partner, Vivendi would have three seats on the NBC Universal board.
The announcement of the NBC-Vivendi merger does not signify a done deal. It means the companies reached a preliminary agreement which ends a long auction process that included half a dozen bidders. Details of the transaction between the two companies are still being worked out and it was well understood that the merger could still collapse.
A key factor in completing the merger is the accommodation of Barry Diller, the chairman of InterActiveCorp, who owns a seven percent stake in Vivendi’s entertainment assets. Diller has a complex series of arrangements with Vivendi that gives him veto power over major actions by the company. Though Diller is not expected to take a management role in the new venture, negotiations to buy him out are essential to the final merger.
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