|Mar 04, 2005 | Articles|
NBC Scents Victory as Vivendi Board Meets
by Merissa Marr and Noah Barkin
PARIS (Reuters) - Television network NBC looked set to win Vivendi Universal's multibillion dollar show business auction on Tuesday as the French media giant's board prepared to end months of agonizing over its Hollywood future.
After eleventh-hour talks with two top contenders, Vivendi held a special board meeting in Paris to vote on eliminating a consortium led by Edgar Bronfman Jr. and approve a preliminary deal with General Electric's NBC for an entertainment merger.
A decision would bring an end to a long hot summer of negotiations that has gripped the media industry and run up huge bills for an army of advisers as some of Hollywood's biggest egos jostled for assets which include Universal Studios.
Vivendi, the world's number two media company, has been weighing up securing cash in the bank to cut its debts with a sale to Bronfman or keeping a hand in Hollywood and betting on an improved return in the long run under an NBC deal.
One source familiar with the auction said Tuesday's board meeting, held at Vivendi's headquarters overlooking the Arc de Triomphe, was expected to start at around 1300 GMT and would likely be followed by a statement if the board makes a decision.
NBC has for long been Vivendi chief Jean Rene Fourtou's favored choice after it proposed a merger to create an entertainment giant potentially worth more than $40 billion that would be minority-owned by Vivendi and run by NBC management. The deal would bring together assets such as Vivendi's Universal Studios, the Hollywood studio behind "The Hulk" and "The Mummy," and cable television network USA with NBC's broadcast network and cable channels including CNBC and Bravo.
However, Vivendi's vice chairman Bronfman has been fighting hard to stay in the race over the past week and remained in negotiations over a bid worth around $13 billion on Monday.
Vivendi stock rose 1.6 percent to 16.19 euros in Paris, adding to gains of four percent on Monday on hopes of a final decision, and gained more than four percent to $17.62 in New York, where markets were shut on Monday for Labor Day. END IN SIGHT?
Fourtou, who was brought out of semi-retirement to get Vivendi back on its feet after the acquisition excesses of former chief Jean-Marie Messier, kicked off an auction more than three months ago with a $14 billion asking price.
While NBC and Bronfman have pushed hard to get close to that price tag, some of Hollywood's biggest players have fallen by the wayside, claiming the price was too high.
Under an NBC merger, Vivendi would own between 20 and 25 percent of the combination and would have the option to sell its stake in pieces over time. Vivendi would also be able to raise cash against a future commitment by GE to buy part of its stake, in order to reach its debt targets, sources said.
But closing a deal may not be easy. GE has won a reputation as an inscrutable negotiator with an eagle eye for fine detail.
"A final deal could take months," said one source familiar with the auction.
Vivendi shied from picking a winner as many had hoped at a board meeting last week, sparking concerns in the Bronfman camp that they were being used as a stalking horse for an NBC deal.
Losing out to NBC would be a personal blow to Bronfman, who is keen to restore his reputation after merging his family's entertainment empire with Vivendi three years ago -- only to see the family fortune disintegrate.
Sources say Bronfman has become increasingly frustrated as he fears the deal is slipping from his grasp. But he remains keen to go to the wire despite receiving little guidance from Vivendi about a preferred deal structure, the sources said.
Bronfman put his executive duties as Vivendi vice chairman on hold to head a team which includes cable company Cablevision Systems Corp. and several private equity firms.
(additional reporting by Kirstin Ridley in London)