GE, Vivendi seal $14B deal creating NBC Universal

By James Bates and Meg James
Los Angeles Times

HOLLYWOOD — After a white-knuckle ride as harrowing as any theme-park attraction, Universal Studios employees are hoping that the stomach-turning ups and downs are over.

As Jacob Serrano, 3, posed for his parents yesterday at the entrance to Universal Studios in Universal City, Calif., a sign behind him promoted the newly completed merger between NBC and Vivendi Universal. Associated Press

The official closing of the $14 billion deal created a major media conglomerate to rival Time Warner Inc. and Viacom Inc. by marrying a top-rated TV network with a cluster of cable channels and a major film studio.

Shortly after NBC got its hands on the keys to the studio, employees arrived yesterday to find gift packages on their desks.

Inside were four DVDs reflecting entertainment made by both sides: Classic Universal films "To Kill a Mockingbird" and "E.T. The Extraterrestrial," the debut episode of the hit television series "Law & Order" and the 25th anniversary special of NBC's "Saturday Night Live." The packages also included GE's annual report and a book on integrity, all topped off with a welcoming note from Bob Wright, chief executive of the newly formed NBC Universal.

" 'Imagine the possibilities' has been our catch phrase from the moment we first considered creating NBC Universal," Wright wrote. "I invite you to now imagine the tremendous possibilities generated by the union of these two great companies."

GE is Universal's fourth owner since public shareholders were bought out 13 years ago. Most recently, the studio struggled through the near-death financial experience of its last parent company, Vivendi, a Paris-based water utility. A distracting for-sale sign had hung over the studio for almost a year.

In all, Universal has had three foreign-based owners who struggled to understand U.S. business and the culture of Hollywood.

"I think there will be much more peace and quiet and happiness at the movie studio now that they have a solid, long-term owner," said Harold Vogel of Vogel Capital Management in New York.

Stability was an impossibility under previous regimes, he said: "As soon as you get settled on one strategy and direction, somebody yanks you by the neck and pulls you in another direction."

That's not to say there won't be plenty of anxiety and challenges now that the $14 billion deal has closed. GE owns 80 percent of the company, which has its headquarters in New York. Vivendi holds the remaining 20 percent and has an option to begin cashing out its stake in two years.

As part of an effort to squeeze out $400 million to $500 million in annual costs, GE is cutting some 500 overlapping jobs over two years, mostly in facilities and television. Some people are getting notices as early as today.

It will take time for Universal to become accustomed to GE's tight-fisted culture. For its part, the industrial and financial conglomerate has never owned a movie studio or theme parks before.

All that aside, Universal is being folded into the bosom of one of the world's largest and most stable companies. GE's pockets are deep enough to ride out turmoil, unlike Vivendi — which came within a whisker of bankruptcy. And unlike any of Universal's previous owners, GE brings deep entertainment experience to the table, having owned a major network for 18 years.

"We've been through a lot of owners, but none of them have been in our business," Universal Studios President Ron Meyer said. "And now, happily, we've found a life here with NBC."

As a potential sign of things to come, analysts pointed to GE's turbocharging of NBC to superstar status after buying it in 1986.

GE shares were up 15 cents yesterday to close at $30.40 on the New York Stock Exchange, while Vivendi's U.S. shares were down 7 cents to close at $23.74.