Comcast Corp is considering spending billions for a stake in NBC Universal, a deal that would transform the US’ largest cable TV provider into one of the most prominent owners of TV shows, movies and other programming, people familiar with the negotiations said on Thursday.
General Electric Co (GE), which owns 80 percent of NBC Universal, has been in talks with Comcast to unload part of the entertainment unit, said the sources on condition of anonymity because the negotiations are preliminary.
SPIN-OFF
Originally these people said Comcast was negotiating a 20 percent to 50 percent stake in NBC Universal. But later they said a scenario under discussion calls for NBC Universal to be spun off into a separate company.
Comcast would own 51 percent and GE would hold the rest. Comcast would pay US$4 billion to US$6 billion in cash for its stake in the company, which would have about US$10 to US$12 billion in debt.
Comcast also would contribute its own cable networks, worth about US$6 billion, to the spun-off company.
A final decision is expected in the coming weeks, but investors already showed their displeasure, knocking Comcast shares down 7 percent.
A Standard and Poor’s analyst cut his rating on Comcast to “strong sell” from “hold.”
Comcast has 24 million subscribers in 39 states and Washington, DC, roughly a quarter of the US cable TV customers, and has said that reaching significantly more people isn’t currently a priority.
But it hasn’t made a secret of its desire to own more programming.
Comcast already owns such cable TV networks as E! and Style and sports channels, and in 2004 it made a US$54 billion hostile bid for Walt Disney Co, which was rejected.
If it pounced on NBC Universal, it would get a broad range of entertainment assets, but most of them have suffered during the recession, with a sharp decline in advertising revenue.
POOR RATINGS
The NBC network is also in fourth place in the ratings, which spurred its decision to move Jay Leno into prime time. Meanwhile, Universal Pictures has seen mixed box office results and attendance at Universal theme parks is down.
NBC Universal also owns the Telemundo network and such cable channels as Bravo, USA Network and CNBC, which Comcast pays to show to its subscribers.
A combination could run into antitrust issues and a regulatory review by the Federal Communications Commission, which oversees the broadcast licenses for 10 NBC TV stations.
Regulators would also examine whether Comcast could wield too much power over local advertisers in markets where it would have both a strong cable presence and an NBC station.
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