GE appears ready to hand over control of NBC Universal to Comcast

After years of telling investors it was happy in the entertainment business, General Electric's hand is being forced by the French telecommunications company Vivendi. Vivendi owns 20% of NBC Universal and must decide in the next two months whether it wants to sell its stake for at least $4 billion, or hold on to its interest. If Vivendi decides it wants out, GE -- whose financial services businesses have been hit hard in the collapse of the capital and real estate markets -- would have to come up with a mountain of cash or find a new investor. Enter Comcast. The family-run public company, which owns several cable networks, has been eager to become a bigger player in the industry. Owning movies, television shows and networks would help Comcast fill its cable pipelines, video-on-demand services and emerging Internet video business. Unlike the $54 billion Comcast would have had to shell out to snare Disney, combining with NBC Universal would come comparatively cheap. The move could result in sweeping changes at NBC's television networks, film studio and theme parks in Los Angeles and Florida. Inside NBC, executives have spent the last six weeks putting together five-year forecasts of their business units for what they thought was going to be a public offering of Vivendi's 20% stake. Most had no idea that at the company's headquarters in midtown Manhattan top executives were negotiating a deal that could give Comcast control of the network and studio. According to people familiar with the situation, GE would lend the joint venture $12 billion, money that would be used to pay Vivendi about $6 billion for its stake. The remaining $6 billion would go to GE as compensation for its equity in NBC Universal and the other entertainment assets. The joint venture would be a private company.



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