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Comcast plan to take control of NBC Universal hits snag

General Electric and Vivendi, NBC's current owners, are sparring over the value of the company, people close to the negotiations say.

November 21, 2009|By Meg James

Comcast Corp.'s plan to take control of NBC Universal has encountered a roadblock.

The Philadelphia-based cable operator, which had hoped to have a deal announced this week to acquire a 51% stake in the entertainment giant, is being held up as NBC Universal owners spar over the value of the company, according to people close to the negotiations.

General Electric Co., which owns 80% of the television and movie company, and French telecommunications firm Vivendi, which owns 20%, have been negotiating for several weeks over the value of the minority stake. GE needs to reach an agreement with Vivendi before it can sell majority control to Comcast.

But Vivendi and GE are still at least $500 million apart in agreeing on a value for the French company's minority stake, according to two people with knowledge of the talks who asked not to be identified because the negotiations are meant to be private. A third person estimated that the two parties could be as much as $900 million apart in value.

GE has placed a value on NBC Universal at $27 billion to $30 billion, said people familiar with the negotiations. At the lower end, that would mean the value of Vivendi's stake was about $5.4 billion.

However, earlier this year, Vivendi determined that its 20% stake was worth substantially more -- $6.2 billion, according to the company's filings.

At an investor conference in Barcelona on Thursday, Vivendi Chief Financial Officer Philippe Capron said that GE's negotiations with Comcast have complicated the picture.

"This year the situation is a bit more complex," Capron said, according to Bloomberg News. "We are not forced to do anything. We could just also say no."

At this point, analysts think such an outcome is unlikely. But negotiations could drag on until Dec. 10, because that's when the window that Vivendi has to exercise its option to sell its stake officially closes. After that time, Vivendi wouldn't have the opportunity to sell its stake, perhaps even through a public offering, for another year.

Vivendi declined to comment, and a GE spokeswoman was unavailable Friday.

Analysts and some NBC Universal insiders believe that a deal is within reach but that both GE and Vivendi are seeking to maximize their leverage, delaying the completion of the Comcast deal. GE plans to sell much of its stake to Comcast, which would control 51% of the new entity. GE would have the remaining 49%.

GE's partnership with Vivendi dates back to 2004, when the industrial giant acquired Vivendi's profitable entertainment assets, including Universal Studios, Universal Pictures and cable channels USA Network and Syfy, in an effort to strengthen NBC's portfolio and diversify its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake in NBC Universal.

The assets that Vivendi contributed to the venture have turned out to be the most profitable -- particularly the cable channels USA and Syfy -- and that fact is not lost on Vivendi.

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