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The sound of ticking as Vivendi SA (EPA: VIV) decides whether or not to sell its 20 percent stake in *NBC Universal* during this year’s window is getting as loud as the clock in the crocodile that haunts Captain Hook. The volume this time around (the French company has the same right every year through 2016) is being pumped up by highly publicized and quite serious negotiations between Comcast (NSDQ: CMCSA) and General Electric, the majority owner of NBC Universal (NYSE: GE). Adding to the noise: reports of interest from News Corp (NYSE: NWS). and Liberty Media.
A source familiar with the discussions between GE and the largest U.S. cable operator cautions that while talks are advanced, details are fluid and there is nothing in place to stop GE from talking to other possible suitors. There’s also no specific time line for Comcast and GE to come to terms or break off — and neither company would be surprised if a Vivendi board meeting scheduled for Wednesday passes without a decision. Sources say both Comcast and GE are prepared for Vivendi to go into November and possibly into December before it makes its decision known.
The current version of the GE-Comcast deal has GE buying the Vivendi stake and taking 100 percent ownership of NBCU, then combining the assets valued at $30 billion with Comcast’s cable networks and its Fancast portal (not the tech properties like The Platform, etc.) plus about $5-6 billion in cash from the cable operator. The new company would have roughly $9 billion that would need to be paid down. That’s a small enough amount — if you can call billions small — to pacify some Comcast investors who don’t want to see the company up its leverage or back off of stock buybacks and investments.
The companies envision the debt being paid down by free cash flow. GE can sell part of its stake to Comcast after three-and-a-half years and the rest at seven years, CNBC’s David Faber reported and we have confirmed. A source says the free cash flow could be used to buy GE out. Similar to the Vivendi-GE deal, this variation gives GE an exit path and Comcast a path to ownership without disrupting the business.
Other suitors?News Corp. and Liberty Media (NSDQ: LINTA) have been mentioned since the Comcast-GE talks became public as possible spoilers. I was told at the time by sources familiar with the company’s plans that News Corp. would be a stretch but Faber included it today with Liberty. News Corp. conceivably could face the toughest regulatory hurdle given its ownership of Fox and its local owned-and-operated affiliates. Speaking of swallowing clocks, News Corp is still trying to digest its Dow Jones acquisition and show that Rupert Murdoch made the right move when he invested in internet properties led by MySpace. This would seem like a total non-starter but when Murdoch is involved, you never know.
Comcast is no cinch either, from a regulatory standpoint. While at first blush it appeared as though a deal with GE would move its programming assets far away from its cable operating business, as currently conceived the new entity would still accrue to Comcast’s balance sheet. It would be a long process but while others focus on the failed effort to buy Disney (NYSE: DIS), remember that under Brian Roberts and Steve Burke, Comcast acquired AT&T (NYSE: T) Wireless and, trust me, that was a long haul. Liberty Media holds a majority interest in satellite operator DirecTV (NYSE: DTV) so has its own regulatory hurdles. It’s hard to tell at this point if there’s anything serious there or if this is just another usual suspects’ list with Dr. John Malone and Greg Maffei in a featured role.
Then again, Vivendi can raise its money by selling to the public. As GE Chairman and CEO Jeff Immelt has said, an IPO is an option.
Zucker and team: Comcast, which has a number of seasoned execs who could step in — including Burke and Jeff Shell, president of the Comcast Programming Group — isn’t planning to sweep NBCU management out. As first reported by Bloomberg and we can confirm, Comcast’s inclination is to leave Zucker and team in place. Meanwhile, Immelt seems to want Zucker to run NBCU although he has avoided saying it outright. Immelt told BusinessWeek: “He