- The Washington Times - Wednesday, May 12, 2004

NEW YORK — NBC clinched its big prize yesterday, completing a merger with the Universal television and entertainment businesses to create a major media conglomerate. NBC Universal will rival Time Warner Inc. and Viacom Inc. in industry clout by combining a top-rated TV network with a major film and TV studio.

The new management lineup is heavy with NBC talent, starting at the top with NBC chief Bob Wright, who will be the chairman and chief executive officer of the new company. NBC’s entertainment leader Jeff Zucker will manage all of NBC Universal’s programming, and Randy Falco, the head of the NBC network, will oversee sales and operations.

The only executive from the Universal side to keep a senior role at the company is Ron Meyer, the head of Universal Studios, who will remain head of the Hollywood studio as well as its associated theme parks.

Appearing at a press conference in New York, top executives from the new company downplayed questions about cultural differences between NBC and Universal and said they expected a smooth integration process. The AOL-Time Warner debacle wasn’t mentioned, but its well-publicized problems were clearly on everyone’s mind.

“It wasn’t done haphazardly,” Mr. Meyer said of the monthslong integration process of NBC and Universal. “I think we can do it differently and better than it’s ever been done before.”

In fact, Universal had been part of another ambitious media merger that went bad. Vivendi, a French water-utility and telecommunications conglomerate, bought Universal as part of a deal spree intended to transform the company into a global media player.

But the engineer of that expansion, Jean-Marie Messier, was ousted after his acquisition program nearly bankrupted the company. The deal with NBC was a major part of Vivendi’s plans to sell assets and reduce its debt.

Vivendi still will own 20 percent of the combined company, with NBC’s parent company General Electric Co. (GE) owning the rest. GE also is assuming $1.7 billion in debt from Vivendi and paying Vivendi $3.4 billion in cash as part of the deal.

The deal brings together television’s top-rated network among the 18-49 age group, which advertisers try hardest to reach; a major movie studio; a television production studio; a handful of cable TV channels including USA, Sci-Fi, CNBC and Bravo; and a group of 29 television stations.

Several of the Universal businesses are familiar to NBC, including cable networks, television production and syndication. Movies are a new area for NBC, but Mr. Wright said the development process there “is not terribly different” from that of TV entertainment shows.

Mr. Wright said he expected the company to see about $500 million in benefits from the merger, including cost savings and revenue growth. He said he expected the job cuts to be limited to 500, or less than 3 percent of the company’s work force, over the next several years.

Before the deal, NBC had been the only major television network that wasn’t part of a larger media conglomerate with its own major production studio. Now that it has one, NBC is not only assured of more future shows in the pipeline, but it also will have more bargaining power in negotiating for shows of its own.

In late trading on the New York Stock Exchange, GE shares rose 15 cents to close at $30.40, while Vivendi’s U.S. shares fell 7 cents to $23.74.

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