TERENCE SMITH: And the big continue to get bigger. With General Electric's announcement today that it had finalized a deal to merge Universal Studios and other properties from the French media concern Vivendi with its NBC television network, the ranks of giant media firms have swelled again.
The new company will be called NBC Universal. It will couple NBC, owned by GE, and Universal Studios, consolidating in one company the No. 1 broadcast television network in terms of viewership and a powerhouse Hollywood studio. In addition, the new company will control the U.S.A. Network and the Trio and Sci-Fi cable channels.
NBC will control an 80 percent stake in the company; Vivendi will retain 20 percent. The two companies valued the deal at $43 billion. It is expected to generate annual revenues of $13 billion. NBC Universal becomes the newest media mega-company, joining the recently re-christened Time Warner, owner of the WB Network, CNN, and Warner Brothers Studios; NewsCorp, which owns the Fox broadcast network and news channel, and 20th century Fox Studios; Viacom, which owns CBS, MTV, and Paramount Studios; and Disney, which runs ABC and its own namesake studios.
Universal and the cable networks merged with NBC are the latest and largest properties to be unloaded by Vivendi, a once-provincial French water bottler that had ambitions of being a global media giant. After a series of major acquisitions in the late '90s, Vivendi's fortunes drowned amid corporate mismanagement and the worldwide economic slump. It is now selling, or merging, many of the businesses it bought during headier times in hopes of paying down debt.
TERENCE SMITH: Joining me now is Bill Carter, television correspondent for The New York Times. Welcome, Bill. What in your view drove this merger, drove these two companies to come together?
BILL CARTER: Well, I think obviously Vivendi needed to find a buyer more than anything else. And NBC has clearly been looking for an opportunity to grow. And this came along and they jumped on it because it was the best opportunity they had ever seen and they were smart to capitalize on it.
TERENCE SMITH: When you look at the media industry in this country what's the significance of this new mega company?
BILL CARTER: Well, I think you partly had it, it's obviously more big companies getting bigger. I think it means NBC has a role to play now in the larger stage, because they are fully competitive really with the Viacoms and Disneys, but I think for the viewer and I get for the independent producer it means less option and less choice.
TERENCE SMITH: We'll get to that in a moment, but explain why it puts them on a better competitive platform with the competition. You're talking, I suppose, about the production facilities.
BILL CARTER: Well, yes. That's a very significant part of it. NBC now gets to control both the distribution and the syndication, so the profits and the revenues are on both ends of most of these deals.
They had a particular problem with the Law and Order franchise, one of the most important franchises that NBC has, three very successful shows. They were owned by Universal. Universal was threatening to offer them on the open market where another network to could take them away. Obviously now that won't happen because NBC owns them and that ownership stake really is what will control the future of an awful lot of broadcasting.
TERENCE SMITH: You talked about the impact on the viewer and consumer, what will it be?
BILL CARTER: Well, I think the viewer won't normally notice any difference in what he sees on the air but clearly you can argue that there is going to be less option for creativity or choice. Most of the networks that have these big studios, they produce them themselves. They produce shows for their own network and it tends to be a little bit harder for the outside producer to get in and I think there is an argument that it stifles creativity.
TERENCE SMITH: So what do you do you if you're an independent producer and face these three very large in effect network monopolies?
BILL CARTER: Well, generally you have to make a deal with the devil and go in business with them. That's usually what the producers do. I know today they told me they made a deal with a big time comedy creator who is now going to create his next comedy for Universal -- I would be willing to bet it winds up on NBC.
TERENCE SMITH: And NBC would then, I suppose, get at least the right of first refusal for anything produced for Universal?
BILL CARTER: That's exactly right. That will be the way it works as it does with the other studios, and NBC isn't any different from anyone else.
TERENCE SMITH: And for the producer then who is turned down by Universal or by NBC or the other network, what options does he have?
BILL CARTER: Well if he has a really creative idea maybe he can sell it to cable, but of course many of the cable channels are owned by the same companies too, so the limitations are there as well.
TERENCE SMITH: There is once again the word synergy comes into the discussion over this deal. Is there real or imagined synergy here?
BILL CARTER: Well, I think there is real synergy. As I said, you will see a company that has both ends of distribution and syndication which creates synergy. NBC is talking about things all the way down to combining the real estate. They have -- both have big plots of real estate in California. They could combine those. Obviously there will be combinations of promotion, advertising and I think executive level will be combined too and you'll see some changes there.
TERENCE SMITH: At a value of $43 billion put this in perspective in relation to the other two big companies that it competes with directly, Disney and CBS Viacom.
BILL CARTER: Viacom, at the moment it's somewhat smaller. I think NBC has -- envisions it growing -- they think it can get even bigger. They have opportunities to add more assets. I think, for example, the cable assets of Viacom, they have MTV networks, they have Nickelodeon, those are stronger assets. The NBC network though is the leading network in profits so they have a bigger base to work from there. I think in general it is going to be a very competitive landscape, for NBC is in the game fully now.
TERENCE SMITH: Is there any reason to expect regulatory problems either in the U.S. or in Europe?
BILL CARTER: No, I don't think so. NBC doesn't seem to have any worries about that. They mentioned that they have to wait for a government clearance of course before this is absolutely finalized but they clearly have no worries about that.
TERENCE SMITH: Okay, another giant joins the crowd. Thanks, Bill Carter, very much.
BILL CARTER: You're welcome.