- The Washington Times - Tuesday, December 1, 2009

PHILADELPHIA (AP) — General Electric Co.’s agreement to buy out the portion of NBC Universal it doesn’t already own paves the way for the sale of a controlling stake to Comcast Corp. in a deal that promises to reshape the entertainment industry.

GE has reached a tentative agreement to buy out French media conglomerate Vivendi SA’s 20 percent stake in NBC Universal, a person with knowledge of the talks told the Associated Press late Monday. The person spoke on condition of anonymity because the negotiations were private and the companies’ agreement has not yet been formalized.

The news lessens the uncertainty surrounding GE’s planned sale of a 51 percent stake in NBC Universal to Comcast, the largest U.S. cable provider. That deal would make Comcast one of the nation’s largest entertainment companies rivaling the heft of its former takeover target, The Walt Disney Co.

Comcast, which is based in Philadelphia, is expected to pay GE about $5 billion to $7 billion in cash and contribute about $6 billion to $7 billion worth of cable channels it owns, such as E! and Style, into a new NBC Universal joint venture. GE would transfer about $8 billion to $10 billion in debt to the joint venture.

GE, which is based in Fairfield, Conn., and acquired NBC in 1986, would own a 49 percent stake in the new NBC Universal but is expected to completely divest its holdings after several years.

An agreement was supposed to have been announced weeks ago, but GE’s talks with Vivendi have been taking longer than expected.

Under terms of its minority ownership of NBC Universal, Vivendi has an annual window to sell its stake, with GE holding the right to first refusal. Vivendi could use the money — two weeks ago, it invested $4.2 billion to take control of Brazilian telecom operator GVT.

But the French media conglomerate knew it had a strong hand — GE wants to sell part of NBC Universal to raise money after suffering losses in its GE Capital unit. Meanwhile, Comcast wants to beef up its programming assets with a marquee name at a price it could handle.

Vivendi hoped to get more than $6 billion for its NBC Universal holdings but GE wanted to pay less, the person familiar with the situation said. While the companies tussled over price in the past weeks, a Vivendi executive said at a conference in Barcelona last month that the company might decide not to exercise the right to sell its stake before the window ends Dec. 10.

Comcast’s agreement with GE has been set and wasn’t expected to be affected by whatever price GE ends up paying Vivendi. The Wall Street Journal reported that GE would pay $5.8 billion for the stake.

A GE spokeswoman declined to comment late Monday.

Vivendi acquired a 20 percent stake in NBC in 2004 after the French company agreed to merge its Vivendi Universal Entertainment business with GE’s NBC. Vivendi was trying to sell off some of its businesses after running up billions of dollars in debt in a buyout binge.

Comcast wants NBC Universal largely for its lucrative cable channels, such as Bravo and CNBC. NBC Universal also spans the NBC and Telemundo broadcast networks, the Universal Pictures movie studio and Universal theme parks.

Comcast is eager to diversify its holdings amid an encroaching threat from online video and more aggressive competition from satellite and phone companies that offer subscription TV services.

Although the deal holds the promise that movies could reach cable TV more quickly after showing in theaters, and that TV shows could appear faster on cell phones, it has already raised concerns that Comcast would wield too much power over entertainment.

Shares of GE rose 6 cents to $16.08 in midday trading while Comcast was up 14 cents to $14.80. But cable investors haven’t been happy with the expected acquisition — Comcast has lost more than $6 billion in market value since reports of the deal first leaked on Sept. 30.

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