Comcast Gets NBC From G.E. in Deal That Reshapes TV
By Tim Arango , The New York Times
, December 4, 2009
After nearly nine months of negotiations, Comcast
, the nation’s largest cable operator, announced an agreement on Thursday to acquire NBC Universal
from the General Electric Company
The deal valued NBC Universal at about $30 billion.
The agreement will create a joint venture, with Comcast owning 51 percent and G.E. owning 49 percent. Comcast will contribute to the joint venture its stable of cable channels, which includes Versus, the Golf Channel and E Entertainment, worth about $7.25 billion, and will pay G.E. about $6.5 billion in cash, for a total of $13.75 billion. For now, the network will remain NBC Universal, but ultimately Comcast could decide to change the name.
Almost immediately, the transaction reshapes the nation’s entertainment industry, giving a cable provider a huge portfolio of new content, even as it raises the sector’s anxieties about the future.
In a joint statement announcing the agreement
, Brian L. Roberts
, the chief executive of Comcast, said the deal was “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.” The deal’s genesis lies in frequent flirtations over the last several years between Comcast and General Electric, although serious talks began in March. For Comcast, the purchase is the realization of its long-held ambition to be a major producer of television shows and movies.
News of the negotiations broke in late September, and in the ensuing weeks G.E. worked to resolve details with Comcast, while simultaneously negotiating to buy out a 20 percent stake in NBC Universal held by Vivendi, the French telecommunications conglomerate. It was this last part that proved difficult. G.E. and Comcast’s part of the transaction has essentially been complete for weeks, but the final step was held up by the negotiations between G.E. and Vivendi. Vivendi will receive about $5.8 billion for its stake.Jeff Zucker
, the current head of NBC Universal, will stay on as chief executive and report to the chief operating officer of Comcast, Steve Burke. In a statement released by the companies Thursday morning, Mr. Zucker called the deal the “start of a new era” for NBC
The deal could take up to 18 months to pass regulatory muster. Although Comcast is based in Philadelphia, NBC’s headquarters will remain in New York, the joint release said.
Most of NBC’s value is in its lucrative cable channels — USA, Bravo, SyFy, CNBC and MSNBC. These networks, along with the channels that Comcast will contribute to the joint venture, will compose 82 percent of the company’s cash flow. The NBC network and Universal Studios will account for only a small portion of the joint venture’s cash flow.
In some respects, G.E.’s decision to sell reflects a desire to exit a business that never quite meshed with its industrial side. “It’s something I always thought about,” said Jeffrey R. Immelt
, G.E.’s chief executive, in an interview. “In some ways my thinking gets shaped by the totality of G.E.”
He said that the economic recession also affected his thinking, adding, “you never have an epiphany.”
NBC has been mired in fourth place among the major broadcast networks, and the economics of the broadcast television business has deteriorated in recent years amid declining overall ratings and a decline in advertising. By contrast, cable channels have continued to thrive because they rely on a steady stream of subscriber fees from cable companies like Comcast.
Mr. Roberts, the Comcast chief executive, failed in 2004 with a hostile takeover bid for the Walt Disney Company
. Since then, the company has taken a less ambitious approach to content, buying a stake in MGM and building up smaller cable channels and regional sports networks. On Thursday, Mr. Roberts said, “I believe our company is strategically complete.”
Shortly after news of the deal leaked in September, G.E. and Comcast signed a standstill agreement, which effectively blocked other bidders from entering the fray. Previously, G.E. had sought to entice Time Warner
. More recently Rupert Murdoch
, who controls the News Corporation
, considered making an offer for NBC Universal.
On Capitol Hill, a number of lawmakers said they would hold hearings to examine the deal in detail. Herb Kohl, Democrat of Wisconsin and the chairman of the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, said he would convene a hearing about the deal “so that consumers can get a better sense of how this deal could affect their access to diverse programming and information, especially as they more often look to the Internet for such services.”
Michael J. Copps, a commissioner of the Federal Communications Commission
who regularly opposes media consolidation, said in a statement that “every citizen has a stake here,” given the size of the combined entity. “The lodestar for this review must be the public interest,” he said.
Foreseeing a long regulatory fight, Comcast published a letter on Thursday that outlined commitments to enrich and extend programming for children and minority groups. It also said policies would remain in place to ensure independence for NBC’s news division.
Asked about the NBC broadcast network and its affiliate structure, Mr. Roberts said in an interview, “We’re committed to free, over-the-air broadcast television continuing.” But he and other Comcast executives acknowledged that broadcasters faced continuing threats to their business model.
Mr. Zucker reassured employees of NBC Universal that given the regulatory hurdles ahead, “for now, it remains business as usual.”
Mr. Immelt said G.E. may consult its future partners on occasion over certain deals. G.E. will still be managing the company when certain significant television rights deals come open for bid within the next year. Under G.E., NBC has become the exclusive rights holder to every summer Olympics since 1988 and every winter Olympics since 2002.
Referring to the coming games in Vancouver and London, which NBC already owns the rights to, Mr. Zucker said, “We’re excited for next year and 2012,” and stressed the company would remain in the bidding for the games in 2014 and 2016.
Mindful of past deals that failed on their promise of synergies, Comcast made sure to point out that the financial projections underlying the deal took no account of any potential cost savings from combining the various assets.
For the thousands of employees of both companies, that is good news. Comcast has about 100,000 employees, while NBC Universal employs about 30,000. Mr. Burke, the Comcast executive who will oversee the joint venture, said, “99.9 percent of those employees are in businesses that don’t overlap.”
Bill Carter and Brian Stelter contributed reporting.http://www.nytimes.com/2009/12/04/bu...c.html?_r=1&hp