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Comcast Buys 51% Stake in NBC-Universal

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Feb 1, 2008
Atlantic City, NJ
Some rumors from last night...

From the LATimes

Comcast in deal talks with NBC Universal

Cable giant Comcast Corp. is kicking the tires of NBC Universal, according to people familiar with the situation.

Comcast, the nation's largest cable operator with almost 25 million subscribers, has been looking to increase its content holdings for several years. In NBC Universal it would get its hands on not only a big broadcast network and movie studio, but also several powerful cable channels, including USA, Syfy, CNBC, MSNBC and Bravo.

NBC parent General Electric has often denied that it is interested in selling its entertainment holdings. Of course, if history is any guide, Comcast doesn't necessarily wait for an invitation before making a play. Five years ago it made an unsuccessful run to buy Walt Disney Co. for $54 billion.

The price tag for NBC Universal would be substantially less than that. A recent analyst report from J.P. Morgan analyst Stephen Tusa valued NBC Universal at $30 billion to $35 billion. However, such a deal would likely be very complex because there would be huge tax implications for NBC Universal parent General Electric, which first bought NBC in 1986 for $6.5 billion.

That is still a pretty steep price tag for Comcast to swallow. The cable giant has a market cap of $48 billion and about $4 billion in cash so if it were to buy all of NBC Universal, it would be a highly leveraged transaction.

Speculation that GE may be looking to unload NBC Universal has heated up as of late in part because the French conglomerate Vivendi, which holds a 20% stake in the entertainment unit, may look to unload its interest before the end of the year. There have been questions raised as to whether GE -- which has first dibs on the Vivendi interest -- could muster the $4 billion - $5 billion needed to buy back the stake or whether another company such as cash-rich Time Warner or Comcast would step in and buy it.

Whether Comcast is making a serious run at all of NBC Universal outright or just in acquiring a stake in the company or forming a joint-venture remains to be seen.

In a statement, Comcast denied a report from industry website The Wrap that it had a deal to buy NBC Universal, but it declined to elaborate on any other talks it may be having with NBC Universal. A spokeswoman for NBC Universal declined to comment.
For Comcast, getting all or some of NBC Universal would give it programming assets to match its distribution clout. It currently only owns a handful cable networks including E! Entertainment Television, Versus, the Golf Channel, G4 and 10 regional sports networks. None of its cable networks have the commercial success of NBC's assets.

While NBC has lots of assets, many of its entertainment holdings are struggling. Its Universal Studios is in a slump at the box office and its management the NBC network is mired in fourth place in both viewers and demographics. It's big gamble this fall, putting Jay Leno on in prime time, has not delivered big ratings yet although it may prove to be a smart financial gamble. In the first half of 2009, NBC Universal made $1.6 billion on revenues of $7.5 billion. Its revenue accounts for less than 10% of General Electric Co.'s total revenue.

Update: From the NYTimes

Comcast Denies Report of a Deal for NBC Universal

Is a mega-media deal — a merger of Comcast and NBC Universal — imminent?

Comcast, the nation’s biggest cable company, says no.

A spokesman for the company issued a statement to DealBook late on Wednesday denying a report that it had a deal to buy NBC Universal from its parent, General Electric.

“While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate,” the spokesman said.

(People briefed on the matter also denied the report of an imminent deal to DealBook. Whether there have been talks is a separate matter.)

Word of a Comcast-NBC Universal deal was reported by TheWrap, a media-focused blog run by Sharon Waxman, a former reporter for The New York Times. Ms. Waxman reported that “deal points were hammered out at a meeting among bankers for both sides in New York on Tuesday,” citing unnamed executives.

The fate of NBC Universal had been the subject of speculation for months. The New York Times reported this month that Vivendi, G.E.’s junior partner in the venture, was considered likely to sell its 20 percent stake, potentially leading to a spinoff of NBC Universal.

G.E.’s chief executive, Jeffrey R. Immelt, has often said publicly that the company plans to stay in the media business. But a sale of Vivendi’s 20 percent share of NBC Universal in the public market would give G.E. more options if it chose to exit the television and film business by selling its 80 percent stake.

Who would buy NBC Universal? One often-mentioned possibility is Time Warner, but that company’s executives have said repeatedly they aren’t interested in the unit.

Comcast famously tried unsuccessfully to buy another movie studio, Walt Disney Pictures, in 2004.

Your thoughts on this and how it will affect Universal's Theme Parks if it goes through?
Personally, I think it will have somewhat of a minor impact on the parks. If the deal goes through, we will see the removal of all NBC show promotional ads displayed on the attraction buildings, and possibly the removal of a certain attraction! *cough* FFL*cough*
Personally, I think it will have somewhat of a minor impact on the parks. If the deal goes through, we will see the removal of all NBC show promotional ads displayed on the attraction buildings, and possibly the removal of a certain attraction! *cough* FFL*cough*

I am not sure that would happen since Comcast would get both Universal AND NBC. It would only make sense to keep the cross promotions in place in the parks. We may end up seeing a MORE cross promotions from TV since Comcast also owns MLB Network, G4, E!, Versus, and The Golf Channel.
I am not sure that would happen since Comcast would get both Universal AND NBC. It would only make sense to keep the cross promotions in place in the parks. We may end up seeing a MORE cross promotions from TV since Comcast also owns MLB Network, G4, E!, Versus, and The Golf Channel.

I can't wait to ride Tiger Woods:Experience
I'm indifferent. Companies switch hands ALL the time. I don't think it would affect the park in a negative way. I don't think GE has done that much for us anyways. :shrug:
I would rather the company stay in the hands of one of the most successful corporations in the world than be owned by a US Cable Company that frankly has "meh" products and has extremely poor customer service.

I wouldn't want those notions to be brought upon my favorite movie company.

There was also talks about Time Warner buying NBC/Uni, which would be freakin' crazy.
I really hope this doesn't happen. Cable companies like Comcast already hold regional monopolies. Comcast owning a larger stake of channels (offered on a service only they provide in their regions of control) is a dangerous implication to network competition.

I don't even really use cable for the most part, and it doesn't affect me on that tip. I just don't like the idea of companies like Comcast having their hands in so many pots. GE is a huge corporation itself, but they only have an interest in the profits of NBC Universal since GE doesn't really involve itself in the creative side of the business.

Either way, I don't see it affecting the parks too much (but who knows really?) - just would rather not see the parks, the Universal movie studios, NBC, etc. owned by a cable service conglomerate.
Looks like it could happen tomorrow. Source: Theme Park Insider

My former co-worker Staci Kramer offers the best explanation to date of where GE and Vivendi stand on a possible sale of NBC Universal to Comcast. As Staci describes it, GE would buy out Vivendi's 20% stake, then merge NBC Universal with Comcast. GE would retain a stake in NBC/Universal/Comcast, though it could eventually sell that stake to Comcast, which would give the cable giant complete control over NBC/Uni.

NBC Universal, in any case, would retain its ownership of Universal Studios Hollywood and 50% stake in Universal Orlando. (The other 50%, of course, being owned by Blackstone Group, which last week bought the SeaWorld and Busch Gardens parks in a separate deal.)

The Vivendi board meets tomorrow to discuss the proposed sale of its share to GE, though it could delay a decision on that sale until later this year.

"Sources say both Comcast and GE are prepared for Vivendi to go into November and possibly into December before it makes its decision known," Staci wrote.
Well i guess thats my 2011 trip thrown in the air. I don't want to have Mummy loaders who don't tell you how to load or have to collect my express passes from a collection point in India!

Even worse news folks!!! It sounds like the deal is just about signed. THAT's RIGHT!! It's pretty official, just look AT THIS!!:

So, yea. Universal is about to get bought by Comcast, and us loyal fans can do ABSOLUTELY NOTHING about it except to stand on the sidelines and watch as the horrible act unfolds before our eyes.

It makes me SO ANGRY!!!!


Screamscape seems to have some pretty strong feelings on the deal as well.

"Again the news reports are hot about a possible sale of Universal to Comcast… (the very thought makes me want to throw up!) Current reports claim it may be only a 51% of the company sale to Comcast with GE keeping 49% percent, but if you ask me 1% is simply too much for Comcast. You can pretty much throw all quality control out the window if they get their grubby mitts on it, they’ll let all the good rides go into ruin, and I don’t even want to think about what will happen to the Wizarding World of Harry Potter. Comcast would find a way to out-source all ride operations to India if they could.

If the theme park of the coin wasn’t bad enough news, remember that Comcast are the ones trying to pretty much destroy the internet these days, trying to limit their customers bandwidth use, and as a cable TV providers, they’ll probably turn into a pay site… charging customers for the programming, then hitting them up for the bandwidth fees on the backside for downloading it all… it’s a lose / lose situation for everyone. (I can see their new Universal Express system now… “Your Ride Reservation window for Ripsaw Falls is between 9am and 6pm. Have a nice ride!”)"
Its Simple, If They Buy- We RIOT!

Pitchforks and Torches anyone?

I can't wait for the new fake unload at the mummy, "We hope you enjoyed the ride, Please hold... ... ... ..."
Here's a new article on the deal from NY Times.........

The debate goes on as to whether Comcast will either save or ruin Universal. But either way, much like Walt Disney Studios' new structure, it looks like they are maybe planning on some agressive moves :

Not long ago, a first meeting between Hollywood executives and the potential new owners of their studio might have turned on Oscar prospects, this year’s ingénue or the exact dimensions of Russell Crowe’s salary.

But chieftains from Universal Studios, who met in New York recently with Brian L. Roberts and Stephen B. Burke, the top executives from the cable giant Comcast — which is proposing to take control of the movie company in a new venture built around its parent, NBC Universal, and Comcast’s entertainment channels — have been talking about “windows.”

Those are time frames during which pictures can be viewed in theaters, on disc, over subscription cable channels or via video on demand.

Despite a stall in the talks just over a week ago, Comcast has continued to close in on a deal that would give it the reins of an entertainment company valued at $30 billion. General Electric, which currently controls NBC Universal, would become a minority owner, while buying out a 20 percent stake held by its partner, Vivendi.

Because talks are continuing, executives from both Comcast and NBC Universal declined to discuss their plans for the film studio, which is to be run by its president, Ron Meyer, and his current boss, Jeff Zucker, during a regulatory review that is expected to last as long as a year.

Privately, however, people who have been briefed on the possible combination — and who spoke on condition of anonymity to protect the negotiations — said they expected Universal, hurt by weak films and industrywide erosion in DVD revenue, to become a laboratory for an owner that might have to reformulate the movie industry’s approach to its own customers.

In the short term, much of Hollywood is simply relieved that Universal has not been scooped up by companies like Time Warner or the News Corporation, which might have absorbed the company’s 4,000-film library while folding its operations into movie units of their own, Warner Brothers and 20th Century Fox respectively.

“Hopefully, it will give stability to the studio, because we can’t afford to lose another major film studio,” Michael Shamberg, a producer of “Erin Brockovich” and “Along Came Polly” for Universal, said of the Comcast deal.

Mr. Shamberg, who was interviewed via e-mail, said that corporate turmoil had recently curtailed activity at MGM, while units like New Line Cinema, Paramount Vantage, Miramax Films and Warner Independent Pictures had already been downsized or eliminated.

Comcast executives have not signaled changes in the mix of films at Universal, staff cuts or another round of management change. Only last month at Universal, its two chairmen, Marc Shmuger and David Linde, were forced out in a shake-up that left the former marketing president, Adam Fogelson, in the chairman’s post, under Mr. Meyer and Mr. Zucker.

It has been a pretty rough patch for Universal, which ranked as high as No. 2 in market share among Hollywood studios in the early years of the decade, but is now a dismal sixth in the wake of flops like “Land of the Lost.”

Internally, many at Universal are nearly giddy at the prospect of liberation from the management systems at G.E., which have galled studio managers since the conglomerate took charge in 2003, after successive ownership of the studio by Vivendi, Seagram, Matsu****a and MCA Inc.

Under G.E., film executives have complained about what they see as a rigid insistence on quarterly profit growth — difficult to sustain in a business where a surprise hit like “Mamma Mia!” can be followed by a heavily promoted disappointment like “The Express” — and management review systems that have complicated routine matters like the hiring of a lawyer or a change in a release date.

Whatever its intentions, Comcast would have little choice over the next year or two but to stick with a slate of films that is largely in place. In May, the studio plans to release its long-planned Robin Hood film, which is directed by Ridley Scott and stars Mr. Crowe. Beyond that, films in the works include a “Meet the Fockers” sequel, and a comic adventure, “Stretch Armstrong,” based on a Hasbro toy.

In February, the studio is set to release “The Wolfman,” a period horror story, and in March it has a Matt Damon war thriller called “Green Zone.” Both were shot in 2008.

But executives and others briefed on the proposed combination also anticipate a thrust into digital distribution perhaps as aggressive as that signaled by the Walt Disney Company, which last month announced a new system, Keychest, intended to let consumers own digital entertainment for use on whatever device or viewing system they might like.

“If you buy a house, the new owners are going to put money into that house,” offered Chris Silbermann, the president of International Creative Management, though Mr. Silbermann said he had no specific knowledge of Comcast’s plans.

One obvious possibility could involve selling films to Comcast’s 24 million cable customers, via video-on-demand, at or near their DVD release dates, without the expense of a middleman.

A video-on-demand pioneer, Comcast picked up experience on the cheap when it invested a relatively modest $300 million in a partnership that since 2004 has owned MGM, and gained access to that company’s film library.

To date, about 90 percent of Comcast’s extensive on-demand offerings have come without additional charge as part of a basic subscription package, a system that has built customer loyalty and taught consumers to select films on cable rather than disc.

But the company for two years has been testing fee-based on-demand offerings simultaneously with DVD releases from at least seven companies, including Warner Brothers and Fox, in a number of markets, and has offered films as prominent as “Twilight,” “Gran Torino” and “Bride Wars,” splitting revenue with the studios that released them.

“For the first time, the ability to watch a movie becomes an impulse,” said Ryan Kavanaugh, whose company, Relativity Media, has helped finance films like “Fast & Furious,” “Duplicity” and the coming “MacGruber” for Universal. “I think it grows our business exponentially.”

Mr. Kavanaugh is one of many film executives who contend that a quick push toward on-demand can shore up industry profits that have been hollowed out by annual declines in disc sales.

If Comcast, or any owner, were to fail in devising a digital fix, the Universal studio — and the industry at large — could face radical changes to bring its operations in line with the fall in home entertainment revenue, said others who have been briefed on the situation at Universal.

The possibilities include a sharp reduction in the home video staff; the outsourcing of work now done by their own departments, like legal or marketing; and perhaps a severe review of expensive producer deals, weighing the legacy value of longstanding associated companies like Imagine Entertainment, Working Title Films and Stuber Productions against their prospective profitability to the studio.

Brian Grazer, chairman of Imagine, declined to be interviewed. Eric Fellner and Tim Bevan, the co-chairmen of Working Title, and Scott Stuber, the principal owner of Stuber Productions, did not respond to queries.

Still, others predict that the film business, whose profits are already something of a rounding error within large corporations like G.E., Sony or the News Corporation, will only recede further as Comcast becomes preoccupied with the potential of other media properties that come with NBC.

“In a way, it’s the worst possible news for Hollywood,” Roger Smith, a former studio executive and editor in chief of Global Media Intelligence, said of Comcast’s proposed control of Universal within a much larger complex of cable channels and broadcast properties.

“They are an afterthought.”
Well, the deal was done today, here's an article from the LA Times...

Comcast strikes deal to buy NBC Universal from GE

In a momentous shift in the balance of power of the entertainment industry, cable television giant Comcast Corp. announced this morning that it was acquiring control of NBC Universal from General Electric Co.

The proposed $30-billion transaction is the fruition of a longtime ambition by Comcast's 50-year-old chief executive, Brian Roberts, to recast his family-controlled Philadelphia company into a leading producer of movies and television shows and a purveyor of prominent cable and broadcast networks, including the venerable NBC.

Under terms of the deal, Comcast will contribute its entertainment channels, including E and Versus; nine regional sports networks; and about $6.5 billion in cash in exchange for 51% of the new venture, which will continue to be called NBC Universal for the immediate future.

The deal underscores how cable television -- not a broadcast network or a Hollywood movie studio -- has become the new profit center for media conglomerates.

GE, which has owned the NBC network for 23 years, will reduce its ownership in the company to 49%. The deal sets up GE for a gradual exit from the entertainment business, granting Comcast the right to buy out GE's interest within eight years. GE placed a value of $30 billion on its NBC Universal businesses.

Comcast said the entertainment assets that it was contributing to the joint venture were worth $7.25 billion.

Giving up control of NBC Universal represents a significant retrenchment by GE, which has long prided itself on strong management. But the industrial giant no longer appeared to have the wherewithal to navigate the rapidly changing media landscape or the will to make the financial investment needed to revive the slumping peacock network and troubled movie studio.

If the deal wins regulatory approval, the new Comcast-controlled NBC Universal will be one of the largest entertainment companies in the world, with assets spanning the NBC broadcast network; more than a dozen cable channels, including USA Network, Syfy, Bravo, E and Style; nine regional sports channels; the Universal Pictures film studio; Universal Studios theme parks; Spanish-language network Telemundo; more than two dozen TV stations; and a stake in the popular online video website Hulu.

"This deal is a perfect fit for Comcast and will allow us to become a leader in the development and distribution of multiplatform 'anytime, anywhere' media that American consumers are demanding," Roberts said in a statement. "In particular, NBCU's fast-growing, highly profitable cable networks are a great complement to our industry-leading distribution business."

The deal will be one of the first big mergers to face regulatory scrutiny from the Obama administration and is expected to undergo a lengthy review, lasting perhaps a year or longer, before the two companies are allowed to combine. Already advocacy groups and rival media companies are lining up to protest the grip on programming that the new company would have on television and the Internet.

Comcast's move to acquire control of NBC Universal runs counter to the current trend of media giants shrinking. Many investors have concluded that the hoped-for "synergies" between content producers and distributors rarely deliver on their promise.

Earlier this year, for example, Time Warner Inc. unloaded its cable TV division and next week it plans to spin off its AOL unit. Four years ago Viacom Inc. split from CBS Corp after determining that it was nearly impossible to get the two companies' far-flung business units to mesh.

Comcast's deal with GE, negotiated over the last eight months, became possible when French conglomerate Vivendi agreed this week to sell its 20% stake in NBC Universal for $5.8 billion.

Steve Burke, Comcast's chief operating officer, will oversee the new venture, an entertainment colossus that would rival Walt Disney Co., News Corp. and Viacom in size and power. NBC Universal's current chief executive, Jeff Zucker, will stay on to manage the company's day-to-day operations.

As for the legendary Universal Pictures, Comcast would become the Hollywood studio's sixth owner in less than 20 years. Another change in ownership comes at an awkward time for Universal, which has suffered from a string of losses at the box office and turmoil within its management team. The studio's two top film executives were forced out in early October after costly misfires including "The Land of the Lost" and "Funny People."

Comcast's two primary challenges will be integrating two huge companies with dramatically different cultures and fixing the NBC broadcast network, which has suffered from years of mismanagement and cost-cutting.

In what appears to be a major miscalculation, Zucker moved comedian Jay Leno's program into prime time, which has produced paltry ratings for the show and chased viewers away from the late local news programs of affiliated NBC TV stations. The shift also severely damaged NBC's late-night comedy shows, which until this season were some of the brightest stars in the NBC firmament.

A Comcast-controlled NBC Universal will have an advantage over its content-owning rivals: a cable TV pipeline reaching nearly a quarter of American homes with TVs. That not only will give it an edge when it launches new cable networks but also will provide a huge base of customers to which it can sell pay-per-view programming, including movies from the Universal movie studio and sports programming from NBC.

Comcast also will have an important role in determining how entertainment is distributed over the Internet and whether consumers will have to pay more to watch TV shows and movies on their computers and other devices.

More startling to some, Comcast will now own one out of every seven TV channels, provoking concerns about media concentration.