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December 3, 2009 2:34 PM

Many Moving Pieces in Comcast-NBC Deal

Posted by Julie Triedman

After months of negotiations, General Electric Company has agreed to sell control of NBC Universal to Comcast, singlehandedly creating one of the biggest media companies in history.

The two-step transaction was predicated on an agreement between Vivendi and GE because Comcast would only deal with a wholly-owned subsidiary. Under that separate agreement, Vivendi agreed to sell its 20 percent stake in NBC Universal to GE for $5.8 billion.

The NBC Universal deal gives Comcast a 51 percent controlling interest in NBC; GE will own 49 percent, according to a statement released by Comcast. The deal will combine all of NBC's businesses--including cable channels Bravo and MSNBC, and the Universal movie studio--with Comcast's cable networks, regional sports networks and various digital properties. The deal values NBC's properties at $30 billion.

Comcast will contribute its stable of cable channels, valued at $7.25 billion, and will pay G.E. $6.5 billion in cash.

THE COMCAST-GE DEAL

Comcast tapped Davis, Polk & Wardwell and partner David Caplan for the transaction. The firm has represented Comcast on corporate matters for over a decade. Caplan has worked on several recent  deals for the Philadelphia-based cable TV company, including the acquisition of regional sports networks from Cablevision in 2007 and a multi-party joint venture with Sprint and Clearwire in 2008.

Caplan's team on the NBC deal includes: William Aaronson and Marc Williams (M&A); Avishai Shachar and Neil Barr (tax); Frank Azzopardi (IP); Kyoko Takahashi Lin and counsel Cynthia Akard (benefits); Thomas Dore, Jr. (real estate); Joseph Hadley and Jason Kyrwood (corporate finance); and Gail Flesher (environmental).

Davis Polk partners Arthur Burke, Ronan Harty, and counsel Stephen Pepper are advising Comcast on antitrust matters. Comcast has said regulatory review could last nine months to a year. Burke has provided antitrust advice on several Comcast deals, including the company's acquisition of Adelphia Communications in 2005.

In addition to the Davis Polk team, Comcast has turned to Willkie Farr & Gallagher partner Michael Hammer as the company's regular outside FCC counsel.

Weil, Gotshal & Manges partners Howard Chatzinoff and Jay Tabor led GE's outside deal team, which included partners Charan Sandhu (IP), Michael Kam (benefits), and Angela Fontana and Andrew Yoon (finance). GE turned to Arnold & Porter for antitrust advice.

The bank lenders, including JPMorgan Chase, Goldman Sachs, Morgan Stanley, BofA Merrill Lynch and Citi, were represented by Simpson, Thacher & Bartlett partner L. Francis Huck.

THE VIVENDI DEAL

Vivendi has publicly stated that it wanted out of its minority investment in NBC Universal to focus on its gaming and cell phone industries and wholly-owned companies. The current deal assures the company will get money out of its stake.

One stumbling block to a deal with Comcast were the rights Vivendi retained in the 2004 deal: the right to veto a transaction like the Comcast deal, and a right in certain circumstances to force NBC Universal to go public. Under the current agreement, however, Vivendi agreed not to block the transaction by exercising that right.

In exchange, Vivendi is assured that if the deal does not close by next September, GE will buy 38 percent of its stake for $2 billion. "Vivendi knows it will get partial liquidity," says Gibson, Dunn & Crutcher's Ruth Fisher, who represented Vivendi. If the deal closes, Vivendi gets the rest of its money.

Vivendi's relationship with Fisher, co-chair of the firm's media, entertainment and technology practice, dates back to 2004, when she represented Universal Studios in the original transaction between Vivendi and GE that created NBC Universal. (Vivendi, which was the sole owner of Universal before that deal, had tapped Weil Gotshal as its deal counsel on that transaction.)

Vivendi subsequently hired Fisher for the first time in late 2007 for the company's $18.9 billion acquisition of game unit Activision Inc.

Fisher was assisted by M&A practice group co-chair Dennis Friedman, tax partner Hatef Behnia, and employee benefits partner Sean Feller.

GE relied on a second team of lawyers from Debevoise & Plimpton for the Vivendi deal. Debevoise's team was led by Jeffrey Rosen, Kevin Schmidt, and David Schnabel and included Gary Friedman, Jyotin Hamid, David W. Rivkin, and counsel Rafael Kariyev.

Debevoise also assisted GE and NBC Universal in due diligence matters in the second, GE/Comcast joint venture. That team was led by Kevin Rinker and included Geoffrey Burgess and Michael Gillespie.

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