Vivendi takes stake in NBCU off table
EmptyGeneral Electric and Vivendi will remain partners in NBC Universal.
Media and telecom conglomerate Vivendi has decided not to seek a sale of its 20% stake in the entertainment company this year ahead of a Friday deadline, sources familiar with the situation told The Hollywood Reporter on Tuesday.
The steadily downbeat market conditions were a key reason Vivendi's leadership has decided now is not the time to sell. That said, one day after Monday's massive decline, the Dow Jones industrials rose 270 points after fluctuating sharply, and all the major indexes rose more than 3% on Tuesday, with GE shares seeing their biggest one-day gain in more than a quarter century. The stock rose 13.6% to $17.61.
Additionally, Vivendi executives have said they are comfortable with NBC Uni's management.
For example, Vivendi CEO and chairman of the management board Jean-Bernard Levy has praised NBC Uni CEO Jeff Zucker several times this year amid repeated market chatter that GE or Vivendi could sell their NBC Uni stakes. "Jeff Zucker is managing very well through a transition period for NBC Universal," Levy recently said.
Levy and Jeff Immelt, chairman and CEO of GE Electric, which controls 80% of NBC Uni, have been in contact about the future of Vivendi's stake in recent weeks.
Vivendi has an annual window — which starts Nov. 15 and ends the Friday of the first full week of December — to decide the future of its NBC Uni investment. During that period, it can trigger a sale of its stake by notifying GE. The industrial conglomerate in turn can opt to buy those shares or let Vivendi sell up to $4 billion of them in the public market the following year. Vivendi has this option every year until 2016.
Observers had expected Vivendi would retain the NBC Uni stake for now given that valuing it is tricky in the current market. Vivendi executives had in recent weeks left their options open, though, and only signaled a decision hadn't been made. Levy has emphasized he'd sell when a deal makes business and financial sense.
While sources at both companies confirmed the decision not to sell, executives declined for Vivendi, GE and NBC Uni on Tuesday all declined further comment.
Meanwhile, GE on Tuesday moved to reassure investors, saying that its fourth-quarter profit looks set to come in within its guidance range, though closer to its bottom end. In an investor update on its finance unit, it also said refocusing and cost-cutting efforts there will help protect its dividend.
Fourth-quarter profit will be 50 cents-52 cents a share, the low end of the previous forecast, excluding a potential charge of $1 billion-$1.4 billion, the company said.
GE is set to unveil its full outlook for 2009, including for NBC Uni, on Dec. 16. In a conference call, GE vice chairman and CFO Keith Sherin declined to provide details on the expected performance of GE's nonfinance segments before then.
Zucker is set to appear Monday at UBS' 36th annual Global Media and Communications Conference in New York for a luncheon keynote. (partialdiff)