The Comcast-NBCU Combo

Comcast buying control of NBC Universal from GE is the "culmination of the longtime ambition" by Comcast Chair & CEO Brian Roberts to "transform his family-controlled Philadelphia company from a passel of distribution pipes into a leading producer of movies and TV shows and owner of prominent cable channels," according to Meg James of the L.A. TIMES. Roberts: "We are creating a new company with an absolutely first-class set of cable channels. This is the logical evolution of our programming strategy." If federal regulators approve the deal, which was announced Thursday, a "new joint venture would be created by pooling businesses from both companies."

Comcast "would provide nearly $14[B] in assets, including $6.5[B] in cash, for 51% ownership of the new entity." Comcast, whose subscription cable TV systems "would not be part of the new entity," said that its cable channels, including E, Versus, the Golf Channel and nine RSNs, are worth $7.25B. GE as part of the deal "would reduce its ownership in NBC Universal to 49%," and Comcast "would have the option to buy out GE's minority interest within eight years." If approved by regulators, Comcast COO Steve Burke "would oversee the new venture," while NBCU President & CEO Jeff Zucker "would stay on to manage the company's day-to-day operations." James writes the new Comcast-controlled NBCU "would be one of the largest entertainment companies in the world," and would "have an advantage over its content-owning rivals: a cable TV pipeline reaching nearly a quarter of U.S. homes."

The deal "underscores how the high profit-margin business of cable TV ... has become the financial backbone of media conglomerates." Burke: "Cable channels are the best part of the media business today; they are really the crown jewels of any entertainment company" (L.A. TIMES, 12/4). The combined revenue of assets that the joint venture "would control reached $51[B] in 2008, exceeding those of Disney, Time Warner and News Corp." (HOLLYWOOD REPORTER, 12/4). Comcast's total outlay to gain 100% control of NBCU "would be less than" $20B, and Roberts "acknowledged the bargain he was getting." Roberts: "We're buying at a low point in cyclical changes" (N.Y. POST, 12/4).

IMPACT ON SPORTS PROPERTIES: Comcast's Burke said that while NBC Sports "could provide some help to" Versus and Golf Channel, there is "no intention to go head-to-head against ESPN." Burke: "The idea we would take on ESPN is overly simplistic. We have a great set of sports businesses." Burke added a "tremendous advantage" is that NBC Sports and NBC Sports & Olympics Chair Dick Ebersol have "such a wonderful track record of creating great programming that they could only add to what Versus and Golf (Channel) and Comcast Sports Nets are doing." Burke: "We now have the ability to take all of these assets and take them to a different level" (MULTICHANNEL.com, 12/3). In DC, Cecilia Kang notes NBC has "some significant assets, such as" rights to "Sunday Night Football" and rights to the '10 and '12 Olympics (WASHINGTON POST, 12/4). Zucker on CNBC’s “Squawk Box” Friday said, “One of the exciting possibilities here is with NBC Sports.” He noted the success NBC has had on the cable side with its news and business operations, like MSNBC and CNBC, and said, “You think about those possibilities in the sports world, and that’s one of the things that has us really imaging the possibilities as we go forward” (CNBC, 12/4). Meanwhile, The GLOBE & MAIL's Bruce Dowbiggin speculated that as a result of the deal NBC Sports personalities and technology "will spill into Versus," and on this "hybrid channel (NBC Sportsnet?) the NHL could receive a higher profile" (GLOBESPORTS.com, 12/4).

EYE ON THE OLYMPICS: The WALL STREET JOURNAL's Schechner & Worden write NBCU has "some key decisions to make in the coming months, such as how aggressively to bid on TV rights for future Olympic games." Zucker said of the Olympics, "It's certainly something we'd be very interested in staying in. However, we're going to make that decision on a sound economic basis." Sanford C. Bernstein & Co. analyst Craig Moffett said GE "may not want to bid big for the Olympics on its own, but a major opportunity here for Comcast is beefing up sports programming" (WALL STREET JOURNAL, 12/4). Zucker "stressed the company would remain in the bidding for the games in 2014 and 2016" (N.Y. TIMES, 12/4). Zucker said after the 2014 Games, “It’s obviously not decided. … It’s something we’d like to have. But we will be prudent, fiscally prudent, as we look to the 2016 Games” (CNBC, 12/4).

Read more about the Comcast-NBC deal by clicking here.

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