NBC, a unit of General Electric Co, clinched exclusive negotiating rights to finalise a deal that would give it a major film studio, more cable channels and theme parks to vault the No 1 US broadcast network, closer to the ranks of such global titans as Walt Disney Co and Viacom Inc.

   

If the deal is completed, the new company, to be called NBC-Universal, would include Vivendi's Universal Pictures, the Hollywood studio behind The Hulk and The Mummy. Also in the kitty will be cable television network USA, with NBC's broadcast network and cable channels, CNBC and Bravo.

 

New chief

   

"Together we have developed a plan to create an exceptional media company, which would rank among the most profitable in the United States," said Vivendi Chairman and CEO Jean-Rene Fourtou.

   

NBC Chief Executive, Bob Wright, would head the new company.

   

Under the terms set out so far, GE would take 80% of NBC-Universal while Vivendi would keep 20%. Shareholders in the Vivendi Universal Entertainment unit would also receive a $3.8 billion "cash consideration."

    

Vivendi Chief Operating Officer, Jean-Bernard Levy, said the French conglomerate had achieved its goal of doing a deal that valued its US entertainment assets at $14 billion, giving an overall value for the merged entity of around $42 billion.

 

"Together we have developed a plan to create an exceptional media company, which would rank among the most profitable in the United States"

Jean-Rene Fourtou, Vivendi Chairman and CEO

The decision brings an end to a long hot summer of negotiations over Vivendi's entertainment empire that gripped the media industry and ran up huge bills for an army of advisers, as some of Hollywood's biggest egos jostled for position.

   

NBC had long been Vivendi's favoured choice, but Vivendi Vice Chairman Bronfman fought hard to stay in the race. "Edgar Bronfman is bewildered," said one source close to the auction. "But there was little hope of swaying Vivendi today."

   

In the end, Vivendi had to choose between Bronfman's offer of upfront cash to cut its debts, or the prospect of a better return in the long run under an NBC deal.

   

However, there is no guarantee a final deal will be struck.  Vivendi and NBC still need to navigate a complex web of contracts and tax liabilities. But Fourtou was confident a deal could be wrapped up by the end of September.