BY MAVIS SCANLON Bob Wright, chairman and CEO of NBC and vice chairman of NBC parent GE, couldn’t have picked a better time to forge a deal with Vivendi Universal. Not only will NBC gain some of cable’s best-performing networks, it also gains plum content assets in the form of the Universal Pictures film library and the production company that produces the venerable Law & Order franchise; as TV viewing habits migrate to an on-demand model these could benefit NBC for years to come. GE and Vivendi announced Sept. 2 they would negotiate exclusively to merge NBC and Vivendi Universal Entertainment in an equity deal valued at about $14 billion. The deal would create the sixth-largest media company, with revenues of $13 billion, 80% owned by GE and 20% by Vivendi. The combined company would include the Universal Pictures Group movie studio, TV production studio Universal Television, seven cable networks, NBC and the Universal theme parks. The companies expect to seal an agreement within the next month. NBC has long been interested in cable. Earlier this year it bought Bravo, and two years ago it snapped up Telemundo. Now, with NBC’s powerful grip on Thursday nights weakening as Friends ends its long run, and broadcast networks losing share to cable, Vivendi’s cable networks become more valuable. USA Network is in nearly 90 million homes and was No. 1 in the coveted 18-to-49 demo in the 7 p.m. to 11 p.m. time period last year, according to Nielsen Media Research. The 11-year-old Sci Fi Channel, with Bonnie Hammer at the helm, has grown to 80 million homes and was the sixth-highest rated basic cable network among adults 25-to-54 last year. Niche networks Trio and Newsworld International are in almost 20 million and 14 million homes, respectively. “Overall the two companies together present all kinds of opportunities working together,” NBC Cable Networks president David Zaslav told Cable World last week. “There is a wealth of talent and experience to enhance all of our cable channels and using the No. 1 network in America [NBC] both to drive promotions and sales of all those services.” But the gold in the whole package may just be the 5,000-plus-film Universal Pictures library. In addition to this summer’s releases 2 Fast 2 Furious and Seabiscuit, Universal has a gold mine of titles, from staples such as Jaws and The Mummy to more recent releases such as Erin Brockovich and Gladiator. “While Universal’s television business may have been pivotal in driving the GE transaction, it would be mistaken to underestimate the perennial value of Universal’s film library,” said Robert Leighton, president of Starz Encore Entertainment, in an e-mail. Clearly, Universal has seen the value in the on-demand model. “Universal has done an outstanding job in making available some of their best titles for VOD,” said Richard Wellerstein, VP theatrical programming and acquisition at In Demand. Zaslav is keenly aware of the importance of the Universal library. “When you’re a content company you always have to be focused on the new technology,” he says. “One thing that’s constantly in motion is the way people watch TV, and the way they consume content is ever changing.” He noted that one reason NBC is participating in Comcast’s large on-demand deployment in Philadelphia is to learn as much as possible about how consumers react to on-demand programming. “We are focused on this — and the potentially big impact it has.” The revenue model at Universal Pictures, at least, has changed, with the advent of the DVD and on-demand viewing models. The movie studio’s revenue from theatrical releases declined 18% in 2002, to $814 million, while revenue from home video jumped about 11%, to $2.4 billion, and television revenue increased 8%, to $1 billion. Universal insiders say it’s too early to speculate on staff changes, but with $100 million targeted in savings, executives are sure to be looking for redundancies. NBC Entertainment president Jeff Zucker is expected to relocate to New York to work more closely with Wright, according to one Universal insider. Inside money is on USA Network president Doug Herzog, credited with turning around USA, to replace Zucker. That begs the question: Who will run USA? Likely not cable whiz kid Kevin Reilly, who last week came on board at NBC from FX, and who Zucker wants to prime NBC’s prime time for life after Friends. Herzog and fellow Universal Television network executives Hammer and Lauren Zalaznick, the president of Trio, are seen as being secure in their jobs: Hammer has turned around Sci Fi and attracted the likes of Steven Spielberg and Martin Scorsese for original productions and Zalaznick has a small but much buzzed-about network. Jeff Lucas, USA’s ad sales president and an NBC veteran, is a likely contender to run ad sales for the cable nets.
With Shirley Brady.

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