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NBC unveils Telemundo deal

NBC and Telemundo Network Group LLC announced the acquisition of the latter by the former at a press conference Thursday afternoon, for a price of $1.98 billion plus the assumption of $700 million in Telemundo debt.

The deal is structured so that sellers (Sony Corp., Liberty Media Corp. and other investors) get paid one-half in General Electric Co, stock and one-half in cash, with no breakup fee and no collar on the stock price. NBC executives said it could take nine months for the deal to close. It's a definitive, signed agreement subject only to regulatory approvals at the Federal Communications Commission and the Federal Trade Commission, which will scrutinize the deal for antitrust issues.

The parties said they expect to get all sorts of synergies out of the deal -- the networks have colocated owned stations in five markets, including Los Angeles, where Telemundo already has a duopoly. NBC CEO Bob Wright said the network will ask the FCC for a waiver to keep all three stations there. The four other markets where NBC will get English-Spanish duopolies are New York, Chicago, Miami and Dallas.

News and sports are two areas where both networks will collaborate closely, NBC chief operating officer Andrew Lack said.

As part of the agreement, NBC has signed Telemundo's top two executives to long-term contracts, said Mark Begor, NBC's chief financial officer, who led NBC's negotiating team.

Those executives are Telemundo CEO James McNamara and chief operating officer Alan Sokol.

The price equals about 28 times 2001 cash flow, expected to be $70-some million. But Wright stressed that under NBC, Telemundo's earnings will grow quickly -- to $250 million in the first full year (2003) of NBC control.

Looked at it from that perspective, he added, the price-to-cash-flow multiple comes down to "the very low double-digits."