Comcast lands NBC in deal that reshapes media

Comcast lands NBC in deal that reshapes media
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First Published: Thu, Dec 03 2009. 11 12 PM IST

New role: Jeff Zucker, president and chief executive officer of NBC Universal, will head the joint venture. Suzanne Plunkett / Bloomberg
New role: Jeff Zucker, president and chief executive officer of NBC Universal, will head the joint venture. Suzanne Plunkett / Bloomberg
Updated: Thu, Dec 03 2009. 11 12 PM IST
New York: Comcast Corp. has struck a deal to buy a majority stake in NBC Universal from General Electric Co., creating a media superpower that would control not just how television shows and movies are made, but how they are delivered to the home.
The deal had been discussed for months and brought to light deep divisions over the future of the media business, with some lauding Comcast chief executive Brian Roberts as a visionary and others calling it the most foolhardy acquisition since AOL bought Time Warner in 2001.
New role: Jeff Zucker, president and chief executive officer of NBC Universal, will head the joint venture. Suzanne Plunkett / Bloomberg
In a world where the Internet has disrupted traditional media, Comcast wants NBC Universal so it can deliver programming to audiences however they may want it—through TV sets, personal computers or mobile devices.
Not only is Comcast the largest US cable distributor, it is also the leading Internet service provider to homes.
Critics of the deal, including some of Comcast’s shareholders, suggest there is too little overlap between the businesses to draw out meaningful savings, and that competition regulators are bound to burden it with restrictions.
Big media deals rarely work, they say, pointing to Time Warner Inc.’s breakup as an example. Once the world’s biggest media company, Time Warner has spun off Time Warner Cable Inc. and will soon do the same with AOL.
“There’s no question that you really have a great little test tube here because you have one large company that said this is absolutely not the thing to do,” veteran media dealmaker Barry Diller, chief executive of IAC/InterActive Corp. told the Reuters Global Media Summit. “And you have another company that said it’s exactly the thing to do.”
The joint venture will be headed by current NBC Universal chief executive Jeff Zucker, who helped build the company’s valuable cable business, but has also presided over a prolonged slump at its flagship broadcast network.
Comcast’s shares have fallen 11% since reports of the deal first surfaced in September, but were up slightly in premarket trading on Thursday, after it unveiled the transaction.
The deal calls for Comcast to contribute $6.5 billion (Rs30,000 crore) in cash, its cable TV networks and other assets in return for a 51% stake in NBC Universal, which owns TV networks, a movie studio, theme parks and local TV stations. GE will keep a 49% stake.
The companies said in a statement on Thursday that NBC Universal’s businesses have been valued at $30 billion. The Comcast businesses that will be part of the deal—including E!, Versus, the Golf Channel and 10 regional sports networks—are valued at $7.25 billion.
For GE, the deal allows it to concentrate on its industrial business, and could be the first step in a full break with NBC Universal, ending a relationship that stretches back to the dawn of television.
GE can redeem half its interest in the venture after three-and-a-half years, and the remainder after seven years, subject to certain conditions.
As part of the deal, NBCU will borrow $9.1 billion from third-party lenders and distribute the cash to GE.
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First Published: Thu, Dec 03 2009. 11 12 PM IST