Decision Time at Vivendi


Vivendi chairman and CEO Jean-Bernard Levy kept the lines of speculation open regarding his company's 20% interest in NBC Universal at an industry conference last week, telling an audience of investors that the company could force an initial public offering for the stake, but that no final decision has been made.

Every November Vivendi has the option of putting its 20% interest in NBCU — which includes the NBC broadcast network and cable channels SyFy, CNBC, MSNBC, Bravo and USA Network — to NBC parent General Electric. The right goes back to Vivendi's sale of 80% of its Universal studios and cable assets to NBC in 2004.

Vivendi previously has passed on exercising the option, which runs from Nov. 15 to early December each year until 2016.

“An IPO is possible. If we do exercise the put option, we go and prepare for an IPO,” Levy said at the Goldman Sachs Communacopia conference in New York last week. “Unless GE uses a pre-emption right and buys us out at a price. It can go that GE buys us out or at the end of several months the company goes public, assuming we do exercise. But, you understand, a decision has not been made.”

Levy said that he would have exercised the option last year but decided against it because of the turmoil in the advertising market.

Speculation regarding the Vivendi stake heats up practically every year at this time, but this may be different.

For one, Vivendi may need the cash — it is in the middle of a $3.2 billion acquisition of Brazilian telecom company GVT.

An IPO isn't GE's only option, should Vivendi decide to exercise the put right. The conglomerate could buy out the stake for cash (which it has said it would do in the past) or it could allow the stake to be sold to another party.

That latter option may be most attractive to private-equity players that find the partnership's dividend flow more appealing than actually running the company. If GE decided to buy the stake, it has nine months from being notified of Vivendi's intentions to come up with the cash, according to some reports.

Another obstacle is the valuation of the stake, which has ranged from $20 billion to $35 billion, making Vivendi's 20% worth $4 billion to $7 billion. NBCU had been valued at about $44 billion when it was formed in 2004.