November 9th, 2009
WSJ: NBC Universal valued at $30 billion; Stage set for Comcast-GE deal this week?
A report posted to the Wall Street Journal’s Web site said that GE and Comcast have come to an agreement on how to value NBC Universal, a key element of reaching a deal that would let Comcast acquire the television and movie arm of GE.
The Journal, citing unnamed sources, highlights details of the complex deal, which could take a year to gain regulatory approval and could take several years to transition,complexity of the deal. The Journal’s report notes that, while the talks have gained momentum, discussions could still break down for other reasons, including the role of French media and telecom company Vivendi SA, which owns 20% of NBC Universal but has reportedly expressed an interest in shedding its stake.
The current deal being hammered out calls for Comcast to contribute cash and merge its cable networks with NBC Universal to get an initial 51% stake of the expanded company, the Journal reports. But it’s not that simple. From the WSJ report:
Comcast had pushed to lower the value of the existing NBC Universal and raise that of its own cable networks to minimize the cash it would need to inject to reach 51% of the combined entity, people close to the talks say. To resolve the impasse, GE and Comcast created a mechanism that would base Comcast’s cash payment, in part, on NBC Universal’s financial performance before the deal closes, said people familiar with the matter. If NBC Universal’s performance worsens in the months between signing the deal and when it receives regulatory approval and finally closes, Comcast could end up paying less, these people said… Comcast and GE have also resolved how to value the new entity in the years after the deal closes, people close to the talks said. That is important because, under the deal, GE’s remaining 49% would be bought out over seven years after closing, primarily using NBC Universal’s cash flow and borrowing ability, these people said.
Reports surfaced in early October that Comcast was reportedly in talks with GE to cut a deal that would help shape Comcast’s online-content strategy. In his own post at the time, Larry Dignan acknowledged that the chatter around the would be centered around big media but that the Web reach shouldn’t be ignored. Comcast-NBC would have a number of assets to push it deeper in the online world, including the Comcast broadband network and ranked NBC-U properties such as Hulu and iVillage.
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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