Monday, November 23, 2009

Will Vivendi Approve the Sale of NBC

When M&A activity takes place in the open, it certainly lets everyone show their hands. As Comcast and GE try to set the value for a deal, the third party, Vivendi gets to pull some leverage. And so this sale will not be easy as Vivendi plays a bit of hardball. "General Electric and Vivendi are at least $1bn apart in their valuation of the French group’s stake in NBC Universal, damping hopes of a quick resolution to a stand-off that is holding up Comcast’s planned bid for a majority stake in the US broadcast, cable and film group."

Does Vivendi need the money? Does it pay to wait and see. They certainly have the option each year to sell their piece of NBC; do they really need to sell when NBC's value is depressed for many reasons. "The annual window for exercising that option opened on Sunday and will close on December 10. " This fourth place network has purposely put Jay Leno on at 10 pm. Was it done in anticipation of depressing the value of Vivendi's stake. GE would maintain ownership. Perhaps they felt that once Vivendi was out, they could raise its value with better programming again and then sell its remaining share to Comcast at an even higher amount. Sneaky, if true.

if Vivendi is simply using this leverage to force a higher price, does it make more sense to go out as an IPO. "Under an agreement struck when Vivendi sold Universal Studios to the GE-controlled NBC in 2004, Vivendi can force an initial public offering of its stake unless GE offers a more attractive price." Would Comcast still buy up shares in an open market or does the price become unattractive to them? This soap opera drama could become the stuff that might soon air where Leno now sits. Let's call this the new "Dallas" and wait for the Ewings to make a play. Now that was good TV.

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