Vivendi Universal has completed a deal that will see NBC acquire its US entertainment arm and cut debt at the Paris-based media group.
As predicted, General Electric, which owns NBC, has agreed to pay $3.8 billion in cash for the assets which include film studios, cable channels and theme parks (see
Vivendi-NBC Merger In The Offing).
Vivendi is set to pick up $3.3 billion of this total and will retain a 20% stake in the new $40 NBC Universal operation. The US media giant will also take on $1.7 billion of Vivendi’s debt.
The deal is beneficial to both parties as it gives NBC control of the the famous Universal Studios as well as the USA Network and the Sci-Fi Channel while Vivendi takes a further step towards financial security.
An ambitious acquisition policy pursued by former chief executive Jean-Marie Messier left Vivendi with a crippling debt mountain in 2002 (see Vivendi Launches Debt Relief Strategy). Only by disposing of various assets and implementing cost cutting measures has Messier’s successor Jean-René Fourtou been able to reduce debts below €14 billion (see Vivendi On The Comeback Trail, Fourtou Targets Profit).
Fourtou told reporters yesterday that the merger of NBC and VUE will help cut debts to less than €5 billion by the end of 2004, at which point Vivendi should be back in profit.
“This is a very good agreement for Vivendi Universal’s shareholders, both in terms of value creation and the reduction of our debt,” he said.
