Wednesday, Vivendi Universal (NYSE:V) and General Electric (NYSE:GE) reached a definitive agreement to merge Vivendi Universal Entertainment (VUE) with General Electric's NBC. Last month, the two companies entered exclusive negotiations over the terms of a deal, which remain unchanged.

The deal creates NBC Universal, a $43 billion media giant with $13 billion in annual revenues and $3 billion in annual EBITDA. The entity will be 80% owned by GE and 20% by shareholders of VUE. Vivendi will hold three of the 15 board seats.

Vivendi also gets the opportunity to reduce its roughly $13 to $14 billion in debt. As an 86% owner of VUE, Vivendi will receive $3.3 billion in cash. In addition, NBC Universal will assume $1.7 billion of Vivendi's debt. Ultimately, Vivendi will be able to unload its stake in NBC Universal in three stages, beginning in 2006, or even possibly take the company public.

Separately, Vivendi is also looking to sell its 10% stake in Barry Diller's InterActive Corp. (NASDAQ:IACI) to Diller for approximately $2 billion. Interactive also owns a stake in VUE.

When all is said and done, Vivendi will have cut its debt load in half and expects its debt to be rated investment grade when the deal with GE is closed.

And clearly, NBC is a sensible partner for VUE. Vivendi said that NBC Universal would contribute 30% to 50% more to its earnings than VUE, as NBC Universal will achieve revenue synergies of around $100 million and cost synergies of $350 million.

Competing with the likes of Disney (NYSE:DIS), AOL Time Warner (NYSE:AOL), and Viacom (NYSE:VIA), NBC Universal will include Universal Pictures, Universal Television, and Universal's five theme parks. NBC Universal will also have the NBC Television Network, CNBC and MSNBC (jointly owned with Microsoft (NASDAQ:MSFT), USA, Bravo, Sci-Fi Channel, and Telemundo TV channels.

For Vivendi, this is the Sammy Sosa home run to tie the game in the bottom of the 9th. NBC Universal doesn't put Vivendi over the top, but it does save the game. If nothing else, the $7 billion in debt reductions will go a long, long way toward putting Vivendi back on track.

Jeff Hwang can be reached at