Business

Comcast to buy rest of NBCUniversal from GE in US$16.7b deal

NEW YORK, Feb 13 — Comcast Corp yesterday said it would buy General Electric’s remaining 49 per cent equity stake in their NBCUniversal joint venture for about US$16.7 billion (RM51.6 billion), speeding up a deal that had not been expected until at least late 2014.

Analysts said Comcast was getting a good deal at that price, while Comcast’s chief executive said the company moved because it was eager to take control of the business sooner than planned.
Comcast shares rose 7.5 per cent in afterhours trading.

Comcast bought 51 per cent of NBCUniversal in 2011 after winning antitrust approval from the Justice Department. The transaction created a US$30 billion business that includes broadcast, cable networks, movie studios and theme parks.

The news ticker outside the Today Show announces GE’s sale of NBC to Comcast, in New York, in this December 3, 2009 file photo. — Reuters picThe news ticker outside the Today Show announces GE’s sale of NBC to Comcast, in New York, in this December 3, 2009 file photo. — Reuters pic“Pretty much in our opinion given that media stocks have gone up quite a bit, it’s a very attractive price, a fair price because we had a formula buyout,” ComcastChairman and Chief Executive Brian Roberts said in an interview with Reuters. “We feel many good things coming today and in the future and we wanted to get 100 per cent of that for our shareholders.”

In addition to the main deal, NBCUniversal will also buy from GE Capital the properties it uses at 30 Rockefeller Plaza in New York City and CNBC’s headquarters in Englewood Cliffs, New Jersey, for about US$1.4 billion.

Comcast said it would fund the deal with US$11.4 billion of cash on hand, US$4 billion in senior unsecured notes to be issued to GE, US$2 billion in credit facility borrowings and the issuance of US$725 million in subsidiary preferred stock to GE.

Separately, Comcast said it would increase its dividend by 20 per cent and that it would buy back US$2 billion in stock this year. GE also said it would accelerate its own share buy-back program to US$10 billion this year.

“It’s an attractive price — Comcast is getting a good deal,” Wunderlich Securities analyst Matthew Harrigan said.

Long-held ambitions

Comcast turned its attention to NBC after a failed US$54 billion hostile takeover attempt of Disney in 2004 that ultimately led to the resignation of that company’s CEO, Michael Eisner, after more than 20 years on the job.

The hostile offer exposed Comcast’s desire to merge content with distribution at a time when most of its industry peers, such as Viacom-CBS and AOL-Time Warner, were doing the opposite.

While Comcast held the title of the nation’s leading cable operator by a wide margin, its status as a content player was always second tier, with middling networks like E!, G4 and Golf forming the basis of its channel portfolio.

The NBC deal gave the Philadelphia-based cable operator the cable industry’s top-rated entertainment network, USA, its leading business network CNBC, upstart news network MSNBC and Bravo, among others.

For GE, the sale culminates a long-planned exit from the entertainment business.

Since reaching the deal to sell its majority stake in NBC Universal, GE officials have made clear that they eventually planned to exit the entertainment business entirely.

The initial sale contract gave GE the option to sell back as much as all its remaining stake in NBC Universal by mid-2014.

The company’s accelerated share buyback could be an answer to shareholders, who have wondered what GE would do with a cash windfall that could total tens of billions of dollars over several years, as the company sold its remaining NBC stake and recouped more profits earned by GE Capital.

Comcast earnings

In addition to the GE deal, Comcast reported fourth-quarter earnings yesterday.

It posted US$15.94 billion in revenue, up 6 per cent from a year ago. It posted net income of US$1.8 billion, or 56 cents per share, up from US$1.56 billion, or 47 cents a year ago.

In its cable business, it lost a net 7,000 video customers, which is better than the 17,000 subscribers lost a year ago.

Wall Street analysts were expecting Comcast to lose 5,000 customers, according to StreetAccount. It added 341,000 Internet customers in the quarter, which beat the 329,000 new customers analysts were expecting.

Comcast shares rose to US$41.89 after the market close from US$38.97 in regular trading. GE shares rose 3 per cent to US$23.37 from a US$22.58 close. — Reuters 

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