General Electric (GE), the massive industrial conglomerate that owns 80% of NBC Universal, has finally reached a deal in principle to buy the remaining 20% from French media giant Vivendi for $5.8 billion, according to multiple reports. GE's agreement with Vivendi paves the way for the No. 1 U.S. cable company Comcast (CMSCA) to buy a controlling stake in NBC Universal from GE, creating a content and distribution powerhouse and remaking the media and entertainment landscape. GE and Comcast, which have been negotiating the deal for weeks, had been waiting for Vivendi to agree on a price for its stake.
Comcast, which provides cable and broadband service to one-quarter of American households in 39 states, is now one step closer to its long sought-after unification of a storied content factory with a vast distribution network.
From Nov. 15 to Dec. 10 every year, Vivendi has had a window allowing it to sell its stake. Such a sale, which could have been conducted with a buyer other than GE, was seen as necessary before GE and Comcast could reach a larger agreement on the NBC Universal deal. Last week, GE chieftain Jeffrey Immelt held face-to-face talks in Paris with Jean-Bernard Levy in an effort to seal the deal, the Wall Street Journal reports.
Now, Immelt is free to finish the Comcast talks, which has thus far assigned a $30 billion valuation to NBC Universal. The $5.8 billion Vivendi is to receive for its 20% stake implies a $29 billion valuation for the giant media and entertainment, which owns the storied NBC television network and the Universal movie studio and theme parks.
Comcast's deal with GE is complex, and involves the cable giant contributing cash and its cable channels to the new company, which it would direct. GE would retain a 49% stake in the company, but no longer would NBC Universal be controlled by the giant conglomerate, which makes everything from jet engines to light bulbs.
Sources familiar with the talks have told DailyFinance that it would be typical for the Federal Communications Commission and either the Federal Trade Commission or Justice Department to explore the deal -- a process which could take six months to one year.
"It's virtually guaranteed that FCC regulators would review this deal," Glenn Manishin, a former antitrust counsel and trial attorney at the Justice Department's Antitrust Division, and is not involved in the deal, told DailyFinance two months ago. This could be a signature case for Chairman [Julius] Genachowski to demonstrate the principles he enunciated when he was confirmed."
Update 12/1/09 4:45 p.m. EST: The deal is done, the companies hope to announce on Thursday. Comcast will take control of NBC Universal's 10 owned-and-operated stations, triggering a federal investigation, according to a source with knowledge of the deal.
Comcast-NBC deal moves closer after GE to buy Vivendi's NBC stake for $5.8B