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General Electric Co. and Comcast Corp have agreed on a valuation ofaround $30 billion for a joint venture between NBC Universal andComcast, ironing out what has been a key obstacle in talks so far, asource familiar with the matter said on Sunday.
The resolution of that issue brings the parties one step closer toan agreement, but French media conglomerate Vivendi, which owns 20percent of NBC Universal, has not yet agreed to a deal, the source said.
The source spoke on condition of anonymity because details of the discussions have not been made public.
GE, which owns 80 percent of NBC Universal, declined comment, as did Comcast. Vivendi was not immediately available for comment.
The two sides have been in talks to reach a deal that would give Comcast a 51-percent stake in the NBC Universal venture.
Advisers had also been trying to draft governance and exitprovisions for GE’s 49-percent stake that would be palatable to bothsides, sources had told Reuters previously.
Comcast and GE have now resolved how to value the joint venture inthe years after the deal closes, giving more clarity on how GE couldexit its stake, the source said.
Exit provisions are critical in joint ventures because they dealwith when and how a partner can get out. In the case of GE, many of itsshareholders have urged the conglomerate to offload NBC Universal,whose broadcast and cable networks, movie studio and theme parks areconsidered misfits among GE’s mostly industrial operations.
The parties have discussed an option for GE to sell all or part ofits stake in the new venture to Comcast within seven years, sourceshave said previously.
CASH TIED TO PERFORMANCE
Valuating Comcast’s cable networks, Vivendi’s stake and the proposednew company itself had been a key issue for several weeks and wasdelaying the complex deal, sources had said.
Comcast wanted to reduce the value of NBC Universal and increase thevalue of its cable networks to minimize the cash it would need toinfuse in the new company, the source said.
Under the terms that were being discussed, the venture would consistof NBC Universal and Comcast’s collection of cable networks. Comcastwould also contribute between $4 billion and $6 billion.
The parties have now decided that Comcast’s cash payment will dependpartly on NBC Universal’s financial performance. If the unit’sperformance worsens before the deal closes, Comcast could end up payingless, the source said.
Vivendi, whose stake would be bought out entirely, continues to bein talks with GE and is determined to get the best value for its20-percent interest in NBC Universal, the source said. That valuationis still being discussed, the source added
Every year between mid-November and mid-December, Vivendi has todecide whether to exercise its “put” option to sell its NBC Universalstake.
This year, Vivendi is eager to dispose of its stake, which itacquired as part of a 2004 deal to create NBC Universal, and isnegotiating the valuation with GE, sources have said previously.
It’s not clear what Vivendi is asking for, but it could besweeteners beyond the price of the stake, a source previously toldReuters.
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