Practice Notes

Vivendi Counsel on Merger Between NBCU and Comcast

It's rare that a $5.8 billion deal is considered little. But because it's a piece of a $30 billion transaction between two huge entertainment companies, it felt like a small part for Gibson, Dunn & Crutcher partner Ruth Fisher, who represented Vivendi SA on the sale of its 20% stake in NBC Universal to General Electric Corp. In December, GE finalized an agreement to sell NBC to Comcast Corp.

“The interesting thing on my little piece of the deal was that our client, unusually, will get some liquidity whether the GE-Comcast deal closes or not [in] September,” Fisher says. Fisher won't say how long the deal took from start to finish, just that “it was a complicated deal. It was heavily negotiated.”

Complicated is an understatement. Here are the basics of the Vivendi piece: Vivendi will sell its 20% stake in NBC Universal to GE for $5.8 billion and will not be a shareholder in the new entity. If the GE-Comcast transaction is not completed by September 2010, Vivendi will instead sell 7.66% of NBC Universal to GE for $2 billion. The remainder of the stake, or 12.34%, will be sold for $3.8 billion to GE upon completion of the GE-Comcast transaction.

Vivendi will continue to receive quarterly dividends from NBC Universal between now and the completion of the GE-Comcast transaction. GE has agreed to make transaction payments to Vivendi to the extent that NBC Universal's 2010 dividend payments to Vivendi are less than $268 million. If the GE-Comcast transaction is not completed, Vivendi will launch an accelerated public offering of its remaining 12.34% of NBC Universal.

Regulatory review for the transaction is expected to take at least 12 months, Fisher says. Fisher, a corporate partner based in Los Angeles and co-chairwoman of Gibson, Dunn's entertainment practice group, says that most big entertainment companies are looking for new ways to retain their core consumer or core revenue streams.

“In the entertainment industry, we've seen a lot of combinations and recombinations of assets as the business models in the industry are under pressure and are changing,” Fisher says. “I think you see all the major players in the entertainment industry exploiting their assets or combining them in ways that will permit new business models.”

Fisher believes the deal shows real signs of life in the mergers and acquisitions market. “It's a real big M&A deal. That's a good upward sign. This is the kind of deal all of us get excited about because it's not simply a purchase sale, it's a structured transaction.”

Vivendi became Fisher's client when she first helped on the 2008 merger of Vivendi Games and Activision for $18.9 billion.

Also helping on the deal at Gibson, Dunn were L.A. partners Hatef Behnia and Sean Feller. L.A. associates on the transaction included Robert Urband and Afshin Beyzaee. New York partner Dennis Friedman and associates Melissa Toomey and Sheera Jacobs were also on the team. NBC was represented by an in-house team, though Vivendi did not deal with NBC. GE's counsel for the transaction with Vivendi was Debevoise & Plimpton. GE's counsel for the transaction with Comcast was Weil Gotshal & Manges.

Amanda Royal is a staff reporter for The Recorder, the San Francisco-based ALM affiliate of Entertainment Law & Finance.

General Counsel for Live Nation Describes Team

Live Nation is building a new music industry model inside the walls of its Beverly Hills headquarters. Already the world's largest concert promoter since its spinoff from Clear Channel Communications in 2005, Live Nation bills its strategy as “the industry's first artist-to-fan vertically integrated concert platform,” demonstrated by its signing of major acts like Madonna, Jay-Z, Shakira and U2 to multiple rights agreements that, depending on each deal, involves recordings, marketing, merchandising and, of course, promoting live performances. The company has seen its share of controversy ' concert fans have grumbled about its current bid to merge with top ticket seller Ticketmaster, a proposed deal still under review by the Justice Department.

Live Nation also owns and operates 45 amphitheaters and 35 clubs/theaters, including the Fillmore (which it is transforming into a brand name for music clubs it owns in cities across the country) and the House of Blues.

Before joining Live Nation in March 2006, the concert promoter's executive vice-president and general counsel Michael Rowles was senior vice president, general counsel and secretary of Entravision Communications Corp., a Santa Monica, CA-based Spanish-language media company he joined in 2000. From 1996 to 2000, Rowles was a partner in the law firm of Zevnik Horton Guibord McGovern Palmer & Fognani, where he specialized in securities law and mergers and acquisitions. After graduating from the University of Illinois College of Law in 1992, he worked as an associate in the corporate department of Chicago-based Jenner & Block. At Live Nation, Rowles reports to CEO Michael Rapino.

Rowles leads a legal team of 22 in-house lawyers ' most in California and a few in other locations around the world ' to monitor the company's global business. Much of his duties have centered around building a governance function. “Our biggest building block was to build a corporate function befitting a public company,” says Rowles, who also was part of Entravision's IPO and caught the attention of Live Nation because of it.

He has structured reporting relationships within the department to have in-house attorneys report directly to a division head or an officer to make sure immediate issues are taken care of. “We don't have a plain vanilla legal business here. I want smart, aggressive lawyers who are flexible and adaptive. We promote hundreds of different musical artists around the world. That dynamic is not static.”

Rowles believes in keeping as much of the company's work in-house as possible, with the exceptions of litigation and major transactions. Outside firms handling that workload include Latham & Watkins and Greenberg Traurig. Latham is representing Live Nation before the Justice Department in its proposed deal with Ticketmaster.

Rowles describes his staffing model as “efficient and cost-effective as possible,” but other than a few contract attorneys and interns, he has radically cut the number of outside personnel that do work for Live Nation. “At one point [Live Nation] was using literally hundreds of law firms all over the world to handle small pieces of business,” Rowles explains. “We've been able to consolidate most of that work among a few firms.”

Lisa Holton, based in Chicago, is a freelance writer for The Recorder.

Vivendi Counsel on Merger Between NBCU and Comcast

It's rare that a $5.8 billion deal is considered little. But because it's a piece of a $30 billion transaction between two huge entertainment companies, it felt like a small part for Gibson, Dunn & Crutcher partner Ruth Fisher, who represented Vivendi SA on the sale of its 20% stake in NBC Universal to General Electric Corp. In December, GE finalized an agreement to sell NBC to Comcast Corp.

“The interesting thing on my little piece of the deal was that our client, unusually, will get some liquidity whether the GE-Comcast deal closes or not [in] September,” Fisher says. Fisher won't say how long the deal took from start to finish, just that “it was a complicated deal. It was heavily negotiated.”

Complicated is an understatement. Here are the basics of the Vivendi piece: Vivendi will sell its 20% stake in NBC Universal to GE for $5.8 billion and will not be a shareholder in the new entity. If the GE-Comcast transaction is not completed by September 2010, Vivendi will instead sell 7.66% of NBC Universal to GE for $2 billion. The remainder of the stake, or 12.34%, will be sold for $3.8 billion to GE upon completion of the GE-Comcast transaction.

Vivendi will continue to receive quarterly dividends from NBC Universal between now and the completion of the GE-Comcast transaction. GE has agreed to make transaction payments to Vivendi to the extent that NBC Universal's 2010 dividend payments to Vivendi are less than $268 million. If the GE-Comcast transaction is not completed, Vivendi will launch an accelerated public offering of its remaining 12.34% of NBC Universal.

Regulatory review for the transaction is expected to take at least 12 months, Fisher says. Fisher, a corporate partner based in Los Angeles and co-chairwoman of Gibson, Dunn's entertainment practice group, says that most big entertainment companies are looking for new ways to retain their core consumer or core revenue streams.

“In the entertainment industry, we've seen a lot of combinations and recombinations of assets as the business models in the industry are under pressure and are changing,” Fisher says. “I think you see all the major players in the entertainment industry exploiting their assets or combining them in ways that will permit new business models.”

Fisher believes the deal shows real signs of life in the mergers and acquisitions market. “It's a real big M&A deal. That's a good upward sign. This is the kind of deal all of us get excited about because it's not simply a purchase sale, it's a structured transaction.”

Vivendi became Fisher's client when she first helped on the 2008 merger of Vivendi Games and Activision for $18.9 billion.

Also helping on the deal at Gibson, Dunn were L.A. partners Hatef Behnia and Sean Feller. L.A. associates on the transaction included Robert Urband and Afshin Beyzaee. New York partner Dennis Friedman and associates Melissa Toomey and Sheera Jacobs were also on the team. NBC was represented by an in-house team, though Vivendi did not deal with NBC. GE's counsel for the transaction with Vivendi was Debevoise & Plimpton. GE's counsel for the transaction with Comcast was Weil Gotshal & Manges.

Amanda Royal is a staff reporter for The Recorder, the San Francisco-based ALM affiliate of Entertainment Law & Finance.

General Counsel for Live Nation Describes Team

Live Nation is building a new music industry model inside the walls of its Beverly Hills headquarters. Already the world's largest concert promoter since its spinoff from Clear Channel Communications in 2005, Live Nation bills its strategy as “the industry's first artist-to-fan vertically integrated concert platform,” demonstrated by its signing of major acts like Madonna, Jay-Z, Shakira and U2 to multiple rights agreements that, depending on each deal, involves recordings, marketing, merchandising and, of course, promoting live performances. The company has seen its share of controversy ' concert fans have grumbled about its current bid to merge with top ticket seller Ticketmaster, a proposed deal still under review by the Justice Department.

Live Nation also owns and operates 45 amphitheaters and 35 clubs/theaters, including the Fillmore (which it is transforming into a brand name for music clubs it owns in cities across the country) and the House of Blues.

Before joining Live Nation in March 2006, the concert promoter's executive vice-president and general counsel Michael Rowles was senior vice president, general counsel and secretary of Entravision Communications Corp., a Santa Monica, CA-based Spanish-language media company he joined in 2000. From 1996 to 2000, Rowles was a partner in the law firm of Zevnik Horton Guibord McGovern Palmer & Fognani, where he specialized in securities law and mergers and acquisitions. After graduating from the University of Illinois College of Law in 1992, he worked as an associate in the corporate department of Chicago-based Jenner & Block. At Live Nation, Rowles reports to CEO Michael Rapino.

Rowles leads a legal team of 22 in-house lawyers ' most in California and a few in other locations around the world ' to monitor the company's global business. Much of his duties have centered around building a governance function. “Our biggest building block was to build a corporate function befitting a public company,” says Rowles, who also was part of Entravision's IPO and caught the attention of Live Nation because of it.

He has structured reporting relationships within the department to have in-house attorneys report directly to a division head or an officer to make sure immediate issues are taken care of. “We don't have a plain vanilla legal business here. I want smart, aggressive lawyers who are flexible and adaptive. We promote hundreds of different musical artists around the world. That dynamic is not static.”

Rowles believes in keeping as much of the company's work in-house as possible, with the exceptions of litigation and major transactions. Outside firms handling that workload include Latham & Watkins and Greenberg Traurig. Latham is representing Live Nation before the Justice Department in its proposed deal with Ticketmaster.

Rowles describes his staffing model as “efficient and cost-effective as possible,” but other than a few contract attorneys and interns, he has radically cut the number of outside personnel that do work for Live Nation. “At one point [Live Nation] was using literally hundreds of law firms all over the world to handle small pieces of business,” Rowles explains. “We've been able to consolidate most of that work among a few firms.”

Lisa Holton, based in Chicago, is a freelance writer for The Recorder.