Source: Comcast to pay $13.75B for NBC stake
AP Business Writer
PHILADELPHIA (AP) – After months of negotiations, Comcast Corp. is finally about to seal its deal for a majority stake in NBC Universal, turning the nation’s largest cable TV provider into one of its most powerful media companies.
Comcast Corp. is expected to announce early Thursday that it will pay $13.75 billion in cash and assets to gain control of NBC Universal from General Electric Co. People familiar with the transaction described it to The Associated Press on condition of anonymity because the agreement has not been made public.
The deal is expected to call for Comcast to spend $6.5 billion in cash and contribute cable channels worth $7.25 billion for its 51 percent stake in NBC Universal. GE would hold the rest, though it could sell half of its portion after 3 1/2 years and the remainder after seven years.
The new NBC Universal also is expected to borrow $9.1 billion – part of which will be used to cover the $5.8 billion that GE is paying to acquire Vivendi SA’s 20 percent stake in NBC Universal.
NBC Universal includes the flagship NBC TV network, the Telemundo Spanish-language network, Universal Pictures and theme parks, and about two dozen cable channels such as Bravo and CNBC. Regulators would have to approve the deal, and they are likely to take months to sort out the implications of allowing a company that serves one-fourth of the nation’s pay-TV households to take control of a vast content-creation empire.
Comcast CEO Brian Roberts has been eager to expand his company’s TV and movie content holdings for years. His goal: to diversify Comcast’s holdings amid an encroaching threat from online video and more aggressive competition from satellite and phone companies that offer subscription TV services.
He was rebuffed in 2004 when he tried a takeover of Walt Disney Co., but turned his eye to NBC Universal.
According to people familiar with the talks, when Roberts first approached GE CEO Jeff Immelt about it, GE wasn’t interested. Then late last year, GE’s financing unit was hit hard by the economic downturn, and the Fairfield, Conn.-based company was looking to raise cash.
In early March, Roberts attended a meeting in New York and NBC Universal came up in a chat with an investment banker. The banker later told Immelt of Roberts’ continued interest in NBC Universal.
Immelt called Roberts that weekend, while Roberts was at his daughter’s squash tournament outside Baltimore. Roberts told Immelt that he didn’t want a bidding war and that he sought a “monogamous” discussion, according to the people familiar with the talks. Roberts also didn’t want to put up a lot of cash and wanted to be in control of NBC Universal.
In July, Immelt met with Comcast founder Ralph Roberts, 89, and Comcast’s chief operating officer, Steve Burke, in Sun Valley, Idaho. The meeting would be pivotal and cemented their agreement. In the ensuing months, GE and Comcast teams met to structure their deal.
Roberts might have a tougher sell with Comcast’s shareholders. Many investors, wary of the poor legacy for media mergers, dumped the stock at the first whiff of a possible deal with GE. Shares of Philadelphia-based Comcast have fallen 11 percent, vaporizing nearly $4 billion in market value, since word of the deal leaked Sept. 30.
AP Business Writer Stephen Manning in Washington contributed to this report.