Last week, the Philadelphia based cable giant Comcast announced that after months of negotiations, the corporation will acquire NBC Universal from its current owner, General Electric for $13.75 billion. Already the largest cable operator in the nation, Comcast will control 51 percent of the television and film company while G.E. will control the other 49 percent, with the two creating a conglomerate to control their joint venture. Boiled down to basics, the deal means that Comcast has acquired one of its largest content providers, making it easier and more profitable for the company to distribute NBC’s television shows and Universal’s movies to their various channels, networks and homes of their customers.
In a press release announcing the deal, Comcast chairman and CEO Brian Roberts said “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.” The statement also revealed that the newly formed Comcast Entertainment Group will control the company’s interest in the conglomerate and will stand along with Comcast Cable, the arm which operates cable services.
The deal with G.E. comes five years after a failed attempt to takeover the Walt Disney Company in 2004 by Roberts, in which he launched a surprise and unsolicited bid of $66 billion to buy the company and the networks it owns, such as ABC and ESPN.
The deal will require congressional, and other approvals, before becoming finalized and would marry Comcast’s cable operations and various networks like Versus and the Golf channel, to NBC’s $30 billion worth of television stations, such as USA, Bravo, Telemundo and 27 others as well as part ownership in Hulu, film production studios and distribution, theme parks and more. These assets resulted in a revenue of $16.9 billion for NBC in 2008, which will only add to $34.3 billion Comcast took in that same year.
However, the deal is not as cut and dry as a simple purchase. One of the current owners, the French television conglomerate Vevendi, must be bought out by G.E. with money borrowed by NBC Universal, totaling $9.1 billion in a process. Comcast’s bid is comprised of $7.25 billion worth of networks and digital media in addition to approximately $6.5 billion in cash in order to obtain the controlling interest in the venture, while the purchase has G.E.’s stake falling from 80 percent to 49.
Jeff Zucker, president and CEO of NBC Universal, said “This marks the start of a new era for NBCU, and I’m genuinely excited that I will be leading this wonderful organization, along with the Comcast team, at this important time in our history.”
Zucker, who obtained the position in 2007, will become CEO of the joint enterprise, reporting to Comcast Chief Operating Officer Steve Burke who expressed his confidence in Burke as well as the acquisition, saying, “We are confident that we’ll be even stronger together, and look forward to working with Jeff Zucker and the NBCU team to deliver the best consumer experience.”
It appears as if little will change for Comcast customers in the short term due to the length in which it will take the deal to pass through hearings and finalize for all the parties involved. The press release for the venture also revealed that NBC’s headquarters will remain in New York, instead of Philadelphia where Comcast is based, and will be headed by a board comprised of five directors, three decided on by Comcast and two by G.E.
Kory Dench can be reached at KD608724@wcupa.edu.