New Day Dawns for NBC Universal

By James Bates and Meg james

May 13, 2004 12 AM PT

Times Staff Writers

After a white-knuckle ride as harrowing as any theme park attraction, Universal Studios employees now hope the stomach-turning ups and downs are over.

General Electric Co. and its NBC network sought to convey that they would be stable parents as they completed the acquisition Wednesday of Vivendi Universal’s U.S. entertainment assets, including its television and theme park businesses.

The official closing of the $14-billion deal created a media conglomerate to rival Time Warner Inc. and Viacom Inc. by marrying a top-rated TV network with a cluster of cable channels and a major film studio.

Shortly after NBC got its hands on the keys to the studio, employees arrived Wednesday in Universal City to find gift packages on their desks. Inside were four DVDs reflecting entertainment made by both sides: classic Universal films “To Kill a Mockingbird” and “E.T. the Extra-Terrestrial,” the debut episode of the hit television series “Law & Order” and the 25th anniversary special of NBC’s “Saturday Night Live.” There was also GE’s annual report and a book on integrity, all topped off with a note from Bob Wright, chief executive of the newly formed NBC Universal Inc.

“ ‘Imagine the possibilities’ has been our catchphrase from the moment we first considered creating NBC Universal,” Wright wrote. “I invite you to now imagine the tremendous possibilities generated by the union of these two great companies.”

GE is Universal’s fourth owner since public shareholders were bought out 13 years ago. Most recently, the studio struggled through the near-death financial experience of its last parent, the Paris-based water utility Vivendi Universal. A distracting for-sale sign had hung over the studio for nearly a year.

In all, Universal has had three foreign-based owners who struggled to understand U.S. business and the culture of Hollywood.

“I think there will be much more peace and quiet and happiness at the movie studio now that they have a solid long-term owner,” said Harold Vogel of Vogel Capital Management in New York.

Stability was an impossibility under previous regimes, Vogel added: “As soon as you get settled on one strategy and direction, somebody yanks you by the neck and pulls you in another direction.”

That’s not to say that there won’t be plenty of anxiety and challenges now that the deal has closed. GE owns 80% of the company, which is headquartered in New York. Vivendi holds the remaining 20% and has an option to begin cashing out its stake in two years.

And as part of an effort to squeeze out $400 million to $500 million in annual costs, GE is cutting some 500 overlapping jobs over two years, mostly in facilities and television. Some people are getting notices as early as today.

It will take time for Universal to become accustomed to GE’s tightfisted culture, which places a premium on a demanding management style. For its part, the industrial and financial conglomerate has never owned a movie studio or theme parks before.

All that aside, Universal is being folded into the bosom of one of the world’s largest and most stable companies. GE’s pockets are deep enough to ride out turmoil, unlike Universal’s previous owner Vivendi, which came within a whisker of bankruptcy. And unlike any of Universal’s former owners, GE brings deep entertainment experience to the table, having owned a major network for 18 years.

“We’ve been through a lot of owners, but none of them have been in our business,” Universal Studios President Ron Meyer said. “And now happily, we’ve found a life here with NBC and so hopefully we’ll go off into the sunset together for all times.”

With stability comes the kind of resources that could potentially give the studio more competitive firepower. As a potential sign of things to come, analysts pointed to GE’s turbocharging of the NBC network to superstar status after buying it in 1986.

“The history of NBC was that they took money off the factory floor and put it on the screen, and they were able to stay in first place longer than anyone thought they could,” said media analyst Tom Wolzien of Sanford C. Bernstein.

Looking ahead, GE executives said the game plan was to guide NBC Universal into entertainment’s digital future and to expand further into the film business. Wright acknowledged in an interview that the company might look at film studio Metro-Goldwyn-Mayer Inc., which Sony Corp. is considering buying for $5 billion, although he added that “it sounds pretty pricey from what I’ve seen.”

Jeff Zucker, newly named president of NBC Universal Television Group, said the company’s executives benefited from already working well together.

“That’s the fundamental difference that sets this company apart from others that have done it before. We’re fully integrated,” he said.

NBC executives also know Hollywood’s agents, power players and competitors in ways Universal’s other owners did not when they took the reins of the studio.

Universal’s previous owners were on such unfamiliar turf that it frequently led to awkward cultural clashes. Canadian liquor giant Seagram vowed when it took over to apply some of the same international marketing techniques to Universal films that it used when selling Chivas Regal scotch.

Former Vivendi Universal Chairman Jean-Marie Messier, ousted after nearly driving the company under, waxed endlessly about the future of entertainment resting with the cellphone. And executives at Japanese electronics giant Matsushita Electric Industrial Co. once offered these words of wisdom to Universal executives on how to succeed in the movie business: Make more hits and fewer duds.

For their part, Wright, Meyer and other executives are working overtime to ease anxieties and to project stability.

“We were in play for such a long time,” Meyer said. “But it’s over, we’ve landed and we now have a home.”

Wright also announced that NBC has locked up a new four-year pact with Wolf, the creator through Universal Television of the network’s most successful ratings machine -- the “Law & Order” franchise. Wright made light of the importance that Wolf’s properties played in the company’s decision to acquire Universal: Next fall, 18% of NBC’s prime-time schedule will be produced by Wolf.

“We decided that NBC-Universal-Wolf was just too much,” Wright joked during a news conference.

At 11 a.m. today, Wright and Meyer will lead a town hall employee meeting at the studio, with Wright hoping to further extend his hand to Universal workers as he did with the “welcome” note in their gift packages.

“We’re trying to give people a sense of participation in the history of two great businesses,” Wright said. “It’s a celebration of the joy of combining two companies and two cultures. Universal is the oldest movie studio and NBC is the oldest broadcast network. There is a lot to be proud of, and this is a way to symbolize that.”

GE shares were up 15 cents to $30.40 on the New York Stock Exchange, and Vivendi’s U.S. shares fell 7 cents to $23.74.

(BEGIN TEXT OF INFOBOX)

Lineup changes

NBC Universal announced its new management structure, which includes expanded duties for several key executives:

* Bob Wright, chairman and chief executive of NBC Universal.

* Randy Falco, president of NBC Universal Television Networks Group, in charge of the new company’s overall commercial and operational functions.

* Jeff Zucker, president of NBC Universal Television Group, adds television studios, production and syndication to his portfolio of entertainment, news and cable.

* Ron Meyer, president and chief operating officer of Universal Studios. Reporting to Meyer are Stacey Snider, head of Universal Pictures, and Tom Williams, head of Parks & Resorts.

* Dick Ebersol, chairman of NBC Universal Sports & Olympics, gains responsibility for sports programming on USA Network.

* Jay Ireland, president of NBC Universal Television Stations.

Television Group changes:

* Jeff Gaspin named president of NBC Universal Cable Entertainment & Cross-Platform Strategy. Reporting to Gaspin are Bonnie Hammer, president of USA and Sci Fi networks, and Lauren Zalaznick, president of Bravo & Trio Networks.

* Kevin Reilly named president of NBC Entertainment.

* Angela Bromstad and David Kissinger named co-presidents

of NBC Universal Television Studio.

* John Miller named chief marketing officer.

* Marc Graboff named NBC Universal Television Group executive vice president, with expanded duties over some television studio operations.

* Frederick Huntsberry, former Vivendi Universal Entertainment chief financial officer, becomes chief financial officer and executive vice president for distribution at NBC Universal Television Group. Reporting to Huntsberry are Barry Wallach, president of NBC Universal Domestic Sales & Distribution, and Belinda Menendez, president of NBC Universal International Sales & Distribution.

Source: NBC Universal

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A new universe

Here’s a look at the company emerging from the merger of Universal and General Electric’s NBC.

What the new company will hold

Broadcast networks:

NBC

Telemundo, Spanish-language network

Television stations:

14 NBC stations

15 Telemundo stations

Studios: