NBC clinched its big media prize Wednesday, completing a merger with the Universal television and entertainment businesses to create a major media conglomerate. NBC Universal will rival Time Warner Inc. and Viacom Inc. in industry clout by combining a top-rated TV network backed up by a major film and TV studio.
The new management lineup is heavy with NBC talent, starting at the top with NBC chief Bob Wright, who will be the chairman and CEO of the new company. NBC's entertainment leader Jeff Zucker will manage all of NBC Universal's programming, while Randy Falco, the head of the NBC network, will oversee sales and operations.
The only executive from the Universal side to keep a senior role at the company is Ron Meyer, the head of Universal Studios, who will remain head of the Hollywood studio as well as its associated theme parks.
Appearing at a news conference in New York, top executives from the new company downplayed questions about cultural differences between NBC and Universal and said they expected a smooth integration process. The AOL Time Warner debacle wasn't mentioned by name, but its well-publicized problems were clearly on everyone's mind.
"It wasn't done haphazardly," Meyer said of the months-long integration process of NBC and Universal. "I think we can do it differently and better than it's ever been done before."
In fact, Universal itself had been part of another ambitious media merger that went bad. Vivendi, a French water utility and telecommunications conglomerate, bought Universal as part of a deal spree intended to transform the company into a global media player.
But the engineer of that expansion, Jean-Marie Messier, was ousted after his acquisition program nearly bankrupted the company. The deal with NBC was a major part of Vivendi's plans to sell assets and reduce its debt.
Vivendi will still own 20 percent of the combined company, with NBC's parent company General Electric Co. owning the rest. GE is also assuming $1.7 billion in debt from Vivendi and paying Vivendi $3.4 billion in cash as part of the deal.
The deal brings together television's top-rated network among the 18-49 age group, which advertisers try hardest to reach; a major movie studio; a television production studio; a handful of cable TV channels including USA, Sci-Fi, CNBC and Bravo; and a group of 29 television stations.
Several of the Universal businesses are familiar to NBC, including cable networks, television production and syndication. Movies are a new area for NBC, but Wright said in an interview that the development process there "is not terribly different" than that of TV entertainment shows.
"The benefit we get out of the GE way of doing business is to try to get things to operate smoothly together -- big things," Wright said. "We're used to that."
Wright said he expected the company to see about $500 million in benefits from the merger including cost savings and revenue growth. He said he expected the job cuts to be limited to 500, or less than 3 percent of the company's work force, over the next several years.
Falco, who will oversee ad sales and operations for NBC and all its cable networks, said he expected to see even more efforts in the future to promote NBC shows across its various media properties.
NBC has pulled out the stops on cross-promotion recently, featuring the casts of "Friends" and "Frasier" on its prime-time news show "Dateline" and other NBC programs as the finales for their series neared. Falco said that while such promotions were "a key to success in the future," they also had to be tastefully done so as not to appear "self-serving."
Falco also said he hoped the company could pull off another success like "Queer Eye for the Straight Guy," which started off as a quirky cable show on Bravo, NBC's cable entertainment channel, before moving to the main network.
Before the deal, NBC had been the only major television network that wasn't part of a larger media conglomerate with its own major production studio. Now that it has one, NBC is not only assured of more future shows in the pipeline but it will also have more bargaining power in negotiating for shows of its own.
"They all have mutually assured destruction," says Tom Wolzien, a media analyst with Sanford C. Bernstein and a former NBC executive. "They all buy and sell to each other. NBC's been on top for a long time, but if it goes into the pits like ABC did, it will still have product."
The company would have had about $13 billion in revenues had it been combined last year, well behind Time Warner, which had $40 billion in revenues last year.
NBC also announced Wednesday that it had extended its deal with "Law & Order" producer Dick Wolf through 2008, and also that NBC News anchor Tom Brokaw would stay with the company for another 10 years to host and produce documentaries.
In trading on the New York Stock Exchange, GE shares were up 15 cents to close at $30.40, while Vivendi's U.S. shares were down 7 cents to close at $23.74.