Posted by: Ron Grover on September 30, 2009
After months of denying it’s for sale, General Electric (GE) seems to be entertaining offers for its NBC Universal unit. According to multiple sources, cable giant Comcast (CMCSA) is among those who are kicking the tires for NBCU, whose properties include the NBC broadcast network, the Universal film studio and a brace of cable TV channels that include USA, Bravo and the SyFy network. A Comcast spokeswoman denied a report in the The Wrap, a media blog started by former New York Times reporter Sharon Waxman, that Comcast has a deal in place to buy the NBC Universal unit for $35 billion.
Nevertheless, a source close to Comcast acknowledged to BusinessWeek that the cable giant, which in 2004 made an ill-fated $54 billion bid for the Walt Disney Company (DIS), had indeed begun to assess the NBC unit and might have an announcement in the next few days. Other sources have said that at least one other bidder may have emerged since Comcast stepped up the talks on Tuesday. That’s thought to be Time Warner (TWX), although a Time Warner spokesman said it “was absolutely untrue” that the company was angling to buy the GE unit. An NBC spokesperson could not be reached for comment.
The flurry of dealmaking rumors were no doubt stoked by a recent decision by French telecommunications and media giant Vivendi to explore selling off its 20% stake in NBC Universal. Vivendi has the right to sell its option each November, under the terms of its 2004 agreement to merge its cable channels and the Universal Studio with NBC. Until recently, the thinking was that GE might spin off its NBC unit in an IPO and buy back the 20% stake, but sources say that was before Comcast and other bidders stepped up to explore buying the stake instead.
Comcast has since expanded its horizons to consider the entire company, the Wrap reported. At first blush the deal makes perfect sense. Growth in its base of nearly 24 million subscribers has slowed (and fell by 2.7% in its most recent quarter), putting increased pressure on the company to raise rates or to aggressively push into new services like phones and the internet. The company already owns some programming asserts, including the E! cable channel, but programming accounts for only 4% of its revenues in its most recent quarter. Those assets are growing faster than Comcast’s cable unit.
Comcast could use some of NBC’s cable assets, which are considered among the most well-managed in the industry. What it would do with some of the rest of NBC’s assets is unclear. It could make use of the studio, whose library would be a good source of programs for Comcast’s growing video on demand offerings. But the cable operator would likely jettison the theme park unit.
That, of course, assumes that Comcast is really bidding. Or that Time Warner, which is sitting on $7 billion in cash, isn’t the buyer instead.