The rumors have been swirling for a few months about the possibility of NBC Universal being unloaded by the parent company, General Electric. Two days ago, the news was that Comcast was going to buy NBC Uni for an exorbitant amount of money, and, though people thought it strange, those in the industry were doing the mental calculations to see if it might actually be possible.
The latest is that Comcast might simply buy in. But to what purpose? Is GE cash strapped? Is GE going to buy something we aren’t aware of?
from AllThingsD
So, the latest theory seems to be that Comcast (CMCSA) is in talks to buy 20%-50% of NBC Universal, the TV/movie studio/cable/theme park company owned 80% by General Electric (GE) and 20% by Vivendi.
As I noted in a post last night, the Web site TheWrap.com yesterday asserted that Comcast had inked a deal to buy NBC Universal for $35 billion; Comcast said that was wrong, but didn’t deny being in talks.
$35 billion? How much of that is for Jay Leno? Probably much less than what it would have been 3 weeks ago.
This morning, the AP is reporting that two people familiar with the negotiations confirm talks for Comcast to acquire up to half of NBCU, including Vivendi’s stake. Bloomberg, not to be outdone, says its three sources “with knowledge of the discussions” say talks for Comcast to buy 50% of NBC Universal have been underway for at least two months, but that no agreement is certain. The FT has a more conservative take, asserting that while GE has “sounded out” Comcast about buying part of NBCU in the event that Vivendi decides to divest its stake, “people familiar with the matter” said the talks were at a “very early stage,” and that “the likelihood of a deal was slim.”
Why would you sell only a part stake in something, unless you did need cash? The word from other places is that Comcast wants the cable channels, USA, and SyFy (hate that name change), and wants to then dump the main product, NBC broadcast.
Meanwhile, as I warned in my post on the situation last night, investors are not happy with any of this.
Bernstein Research analyst Craig Moffett notes that while Comcast still has a clear appetite for content acquisitions, there would be large hurdles to a deal for NBCU, including a recent comment from the company that they do not want to issue debt or equity to finance a transaction. That would make a deal pretty much impossible, given Comcast has just $4 billion in cash. Moffett also notes that NBC owns broadcasting stations in Comcast markets such as Philadelphia, Chicago and San Francisco, creates potential regulatory challenges. And he points out that a deal “would play to investors’ worst fears about Comcast’s capital allocation,” adding that investor reaction would likely be strongly negative.
Writes Moffett: “An acquisition of a major content studio, even if consummated at an attractive price, is most decidedly not what Comcast investors had in mind.”
I am not certain that any such deal would be Comcastic, but that’s because I am not a shareholder, merely a viewer. For the cable company, it would mean a way to begin its own programming, which would be good, but at what cost?
Is the company not having enough problems competing with Verizon, on the cable vs. fiber front? After all, copper needs replacement much sooner than fiber, so any standard cable company must keep costs of repair and replacement in the short term expenses equation.
Since we are getting all this out in the open, why not get rid of the ineffective programming staff, that has given the go ahead to the continuation of many less than spectacular shows, and the development of an entire new line up of stinkers? As I have said a few times before, why not bring a few of the superior shows (that are recognized as superior by their mention in the television awards shows) from USA and SyFy to NBC proper? That would help the sagging ratings, and thereby boost sagging revenues.
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