Nearly eight months after negotiations first became public, General Electric and Comcast have agreed to a $30 billion deal giving them joint custody of NBC Universal and, in the process, turned America's largest cable company into one of the world's largest purveyors of movies and television programming, a goal its been chasing for years.
The agreement that gives Comcast a majority stake in NBCU, is “a perfect fit for Comcast and will allow us to become a leader in the development and distribution of multiplatform ‘anytime, anywhere’ media that American consumers are demanding," said Brian Roberts, the chief executive of Comcast.
Frost & Sullivan analyst Dilip Sarangan, said the agreement looks like a win-win situation for both companies, but its fallout for consumers may not be as bright. "In addition to the obvious generation of immediate cash, GE seeks to benefit from the access to the content distribution of Comcast," he said. "While this deal looks good on paper for both companies' shareholders, the impact of this deal on consumers may be the biggest shock from the expansion of Comcast."
In the end, it took a French connection -- in the form of Paris-based media conglomerate Vivendi -- to make the deal happen. Vivendi, which owns 20% of NBCU, earlier in the week agreed to sell its share to GE for $5.8 billion, less than it wanted, but more than analysts had expected it would fetch. GE and Comcast had agreed to value NBCU at $30 billion, making Vivendi's share worth about $6 billion.
NBCU will meld its assets -- among them cable channels USA, Bravo, SyFy, CNBC and MSNBC, NBC's broadcast networks and stations, Universal Studios and amusement parks -- with about $7 billion worth of Comcast's cable networks -- including Versus, the Golf Channel and E Entertainment as well as some web assets. Comcast -- which will have a 51% share of the joint venture -- will likely invest an additional $5.5 billion to $6 billion in cash.
GE is likely to continue to gradually sell more of its share to Comcast as it tries to extricate itself from the media business and focus on core industries. That, said, on pundit, could be problematic as Comcast looks to build its brand.
"It's going to be a management challenge when one party is looking to grow and the other party is looking to get out," Bob Wright, former chief executive of NBC Universal, told the Wall Stree Journal. But, he added, “New blood, new energy will be a good thing. (Comcast is) buying NBCU in the deepest, darkest moments of media. I think they are value buyers and they are good asset managers."
The deal is likely to face drawn out regulatory hurdles that could take up to 18 months to clear, as Obama administration regulators have said they will aggressively investigate whether mergers stifle competition.
Advocacy group Free Press in Washington reiterated today that it would ask regulators to block an NBC sale to Comcast because the cable operator would have too much power over what viewers see, reports Bloomberg.
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