Comcast takes controlling share in NBC

04 December 2009

NEW YORK: Comcast, the US cable TV giant, has agreed to buy a controlling share in NBC Universal from General Electric, a deal that will create one of the biggest media operators in America.

Under the terms of the agreement, Comcast will pay General Electric some $6.5 billion (€4.3bn; £3.9bn), giving it a 51% stake in a new joint venture, of which GE will retain 49%, having reacquired a 20% holding in NBC from Vivendi for $5.8bn.

Comcast's portfolio of offerings, which include E!, Versus and a number of local sports channels – valued at over $7bn in all – will now be combined with NBC's trademark network, as well as its other stations, like CNBC and Bravo.

It is estimated that the Comcast–NBC conglomerate will have a market value of around $52bn, placing it ahead of Disney, on $36bn, News Corp, on $30bn, and Time Warner, on $29bn.

Brian Roberts, chief executive of Comcast, predicted the alliance "will allow us to become a leader in the development and distribution of multiplatform 'any time, anywhere' media that American consumers are demanding."

Cable TV revenues have remained comparatively stable in the downturn, while free-to-air broadcasters have struggled as ad revenues plummet, but Comcast does not plan to change the structure of NBC's eponymous network at present.

David Cohen, executive vice president of the company, stated "we will continue our co-operative dialogue with our affiliates toward a business model to sustain free over-the-air service that can be workable in the evolving economic and technological environment."

Going forward, GE will be able to sell back 50% of its holding in mid-2012, and the remaining percentage after seven years.

However, the proposed unification of the two firms – which must receive regulatory approval – has drawn criticism from consumer groups, who suggest it may have a negative impact on the market.

Mark Cooper, director for the Consumer Federation of America, suggested "this merger's potential to foreclose competition and stifle innovation is significant and real."

On a corporate level, observers are also wary of the potential benefits, with previous examples, such as Time Warner's ill-fated takeover of AOL, showing the pitfalls that can result from attempting to combine the operations of major organisations.

Peter Fader, marketing professor at the University of Pennsylvania's Wharton School, argued "these kinds of big mergers always have a 'crapshoot' element to them."

"You can never predict with certain success or failure. You can always see it with 20-20 hindsight. This one will be no different."

Data sourced from Financial Times/Associated Press; additional content by Warc staff