Buying NBC Universal
Comcast, Time Warner Might Consider Acquisition if Vivendi, GE Sell
Oct 13, 2009
"NBC Universal is now formally in play," according to Nikke Finke (GE Considers Shedding Control of NBC Universal, 10/1/09). The entertainment media have been abuzz ever since a report surfaced about a potential NBC Comcast deal. It all started with a scoop posted on The Wrap blog – Comcast considered buying NBC Universal for $35 billion. The same evening, Comcast officially responded, casting doubt on the report: "While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate" (The Wrap, 9/30/09). NBC U didn't comment.
CNBC's David Faber later reported that the "deal under consideration would allow Comcast to take 51% economic control of NBC Universal" (GE is in Talks to Spin Off NBC, Give Comcast 51% of New Unit, 10/1/09). The potential deal is complicated – it would involve spinning off NBC Universal into its own company, of which Comcast would get 51% and GE 49%, a transfer of debt, among other considerations. Any talk about the proposed new company is premature, at least until Vivendi – formerly Vivendi Universal – votes to divest itself of its stake in NBC U.
NBC U Ownership
NBC Universal is 80% owned by General Electric and 20% owned by Vivendi. Every year, Vivendi has the option to sell its stake, either to GE or to the wider market. But it can only do so during a limited timeframe: November 15th through the Friday of the first week of December. It seems likely that Vivendi will exercise its option this year, possibly to be decided at the October 14th board meeting. This has fueled much speculation in the entertainment industry, both about who would buy NBC U and what the new company would look like.
NBC Comcast Deal?
While The Wrap's news of Comcast buying NBC started much of the chatter, Comcast is on record as wanting to make acquisitions, specifically content acquisitions. In September, Comcast COO Steve Burke stated, "If the opportunity came about where we could add cable content to our portfolio, I think we would do it" (Broadcasting & Cable, 9/30/09). Adding to the industry talk is the fact that Comcast once made a $54 billion offer for Disney. NBC Universal offers just the kind of cable content that Comcast desires.
While NBC television seems like it's faltering – most notably with flagship broadcast network, NBC – its cable networks have actually been performing very well. NBC Universal has a host of cable channels, including USA, Bravo, Oxygen, and SyFy, along with cable news networks, CNBC and MSNBC, and stakes in The Weather Channel and online video site, Hulu. This past summer was incredibly successful for cable networks, USA especially. With these networks come Universal Studios, theme parks, and generally, a major media footprint.
Time Warner and Other Possible Suitors
Time Warner is also said to be looking to make acquisitions, with Nikke Finke reporting that it's in talks with GE specifically about NBC U (Time Warner to Make Showbiz Acquisitions, 9/28/09). Finke also reported that GE has talked to half a dozen companies about "either an investment in or acquisition of Vivendi's 20% of NBCU or more of the media company" (Half a Dozen Companies Tire-Kicking GE's NBC Universal in Advance of Vivendi Put, 9/30/09).
Currently it looks like Comcast and Time Warner are the likeliest companies to make a play for NBC Universal, due to their financial situations. "Both Comcast and Time Warner have built up war chests which their CEOs could spend on a deal like this instead of continuing share buybacks" (Ibid). But other players have also been mentioned, such as Liberty Media – which owns DirecTV – or Viacom, though that's less likely due to weakened financials.
Given all NBC Universal's content, whoever ends up controlling the company – if, indeed, Vivendi sells – will be in a position to hugely impact the shows and movies that get made. And with respect to Hulu, the free online TV distribution site, the company that controls NBC U may well impact the future of television distribution models. Thus all the fuss.
Since the only thing to do is wait and see, entertainment media have been busy with rampant speculation. Then again, NBC might prefer that to endless ruminations about its ailing fall schedule.
Update: Nikke Finke is now reporting from sources inside Comcast that the company "wants the deal done and announced in November" (Comcast Wants NBCU Deal Done & Announced In November, 10/13/09). She's also reporting that Comcast is the only remaining suitor.
Update 2: Broadcasting & Cable is reporting that Vivendi has deferred the question of selling its 20% stake in NBC U as it concentrates on its acquisition of Brazilian phone company, GVT. This undermines Comcast's desire to get its NBC U deal done by November.
Update 3: Nikke Finke is reporting: "All sides agreed Friday to the transaction's financials after the rough framework was okayed a month ago. Barring some last-minute holdup from Vivendi regarding the sale of its 20% NBCU stake, 'It's a done deal'" (Comcast & GE Pact To Keep NBCU Talks Exclusive For Week, 11/3/09).
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