Comcast’s grand mission to expand its role on the content side is much closer to reality today following the long-expected announcement this morning that it is buying 51 percent of NBC Universal (NYSE: GE) in a deal valued at $30 billion. More than 80 percent of the cash flow to the new NBCU will come from the combined cable assets of the two, including USA, Bravo, Syfy, E, Versus, CNBC, MSNBC and regional sports networks. In case that needs any more reinforcement, the asset list of the combined company puts NBC in the second slot — after the cable nets.
The deal detailed today closely dovetails the outline already laid out (So closely that GE Chairman and CEO Jeff Immelt kicked off an interview on CNBC this morning asking if David Faber if GE and Comcast (NSDQ: CMCSA) “got the deal right.’) Some of the high points:
— Comcast is creating a new group called the Comcast Entertainment Group (CEG) that will hold its interest in NBCU and will be alongside the cable operating business.
— Comcast will pay $6.5 billion in cash and contribute cable and internet (Fandango, Daily Candy) assets valued at $7.25 billion to the deal. The cash will go to GE, which contributes NBCU’s assets valued at $30 billion; NBCU will borrow $9.1 billion; that cash, too, will go to GE.
— GE will buy Vivendi’s 20 percent stake in NBCU for $5.8 billion, and promises to buy 7.66 percent for $2 billion in September 2010, if the Comcast transaction is not closed by then. GE will pay $3.8 billion for the rest when the transaction closes.
— GE has a clearly lighted exit path that should give Comcast full ownership seven years after the deal closes.
— Despite speculation that Comcast would jettison NBC or its affiliates to make it easier to pass regulatory muster, broadcast is staying put.
— The digital assets being combined include iVillage, Daily Candy, Fandango, Movies.com and the various network sites to reach more than 40 million monthly uniques. Comcast’s video portal Fancast is not part of the deal. The new company will hold NBCU’s stake in Hulu. (The 40 million figure is included in the deal press release but a slide in Comcast’s investor presentation totals the monthly uniques at 82 million, The company is checking into it for us.)
— At the same time, Comcast took steps to assuage shareholder concern about the acquisition by upping its quarterly dividend by 40 percent and committed to buying back $3.6 billion in stock over the next three years.
Comcast and GE to Create Leading Entertainment Company; Positions Comcast and NBCU to Lead the Next Phase of Media Industry