Comcast (s CMCSA) and GE (s GE) officially announced a deal this morning that will merge the entertainment properties of the cable company with NBC Universal, creating a new media behemoth valued at around
$30 $37.25 billion.
The venture will be 51 percent owned by Comcast, which is contributing its portfolio of cable networks, such as E!, the Gold Channel, a number of regional sports networks and other digital media properties, all of which are valued at around $7.25 billion. In addition, Comcast will make a payment of $6.5 billion in cash to GE, an amount that is subject to some adjustments between now and close of deal.
GE will own 49 percent of the venture, and will put up the broadcast network, theme parks, movie studio, and cable-television channels of NBC Universal. In order to make the deal work, NBC will borrow approximately $9.1 billion from third-party lenders and distribute the cash to GE.
GE will purchases Vivendi’s (s VIV) 20 percent stake in NBC Universal for $5.8 billion, a price that the companies agreed to earlier this week. As part of that deal, GE has agreed to purchase a 7.66 percent stake of NBC from Vivendi for $2 billion in September 2010, if the Comcast deal is not completed by then. GE would then acquire the remaining 12.34 percent stake of NBC for $3.8 billion when the Comcast deal closes.
Jeff Zucker, current president and CEO of NBC Universal, will be chief executive of the joint venture, reporting to Comcast COO Steve Burke. The new entity will be headquartered in New York, and will have a board of directors that includes three members from Comcast and two from GE.
The companies spent the last nine months negotiating a deal, but now the real fun begins. The deal is expected to face intense scrutiny from government regulators, which will take several months and could wipe out some of the benefits of creating the venture.