Comcast Buying Out GE's NBCUniversal Stake for $16.7B
Comcast will acquire the 49 percent stake in NBC Universal owned by General Electric, the companies announced Tuesday. The move comes well before many expected Comcast to buy out its partner of the past two years.
Under a $30 billion purchase agreement first announced in 2009 and completed in January 2011, Comcast was always going to buy out the stake held by G.E. But it had up to seven years to do so. The announcement Tuesday notes that the timetable has been sped up and the deal is expected to close by the end of March.
“Our decision to acquire GE’s ownership is driven by our sense of optimism for the future prospects of NBCUniversal and our desire to capture future value that we hope to create for our shareholders,” Comcast chairman and CEO Brian Roberts said in a statement.
Besides buying out G.E., Comcast also agreed to purchase the properties at Rockefeller Center in New York that house the headquarters for NBC, as well as the CNBC headquarters in Englewood Cliffs, New Jersey, for an additional $1.4 billion.
Comcast also will acquire the naming rights for the buildings, which are highly visible in Manhattan. There is already speculation that the big G.E. sign at 30 Rock will soon be replaced by another – either Comcast, NBC Universal, NBC or something else.
Comcast stock closed Tuesday on NASDAQ at $38.97 per share, which was up about 9 percent. In after-hours trading, it climbed to $41.95 a share, which is up another 3 percent from the close.
When the deal was first announced in 2009, many thought it was mainly a play by Comcast to acquire NBC Universal’s highly-profitable cable TV channels, including the USA Network and Bravo. Comcast agreed to contribute $7.5 billion in programming and added its regional sports networks and cable channels such as E! Entertainment Television, the Golf Channel and what was then called Versus (now the NBC Sports Network). G.E. then used $5.8 billion to acquire Vivendi's 20 percent minority stake in NBC Universal.
NBC Universal had been formed in 2004 when G.E. merged its ownership of NBC with Vivendi’s ownership of Universal Pictures. At the time, G.E. bought 80 percent of the combined company.
General Electric struggled as owner of NBC Universal. As a company driven by investments, its heart was never in entertainment. NBCU had good years and bad years, which did not help G.E. keep its stock price high. When the deal to sell a majority stake to Comcast was announced, a relieved G.E. CEO Jeff Immelt said that it allowed G.E. “to continue sharing in NBCU’s growth while also providing significant cash to invest in our high-technology infrastructure businesses.”
Roberts said Tuesday that Comcast has been planning for this purchase, which will be funded by $11.4 billion of cash on hand, $4 billion in subsidiary senior unsecured notes that will be issued to G.E, $2 billion borrowed by Comcast under its bank facilities and $725 million of subsidiary preferred stock to be issued to G.E.
Roberts said during the company’s regular quarterly earnings call with market analysts that Comcast is “in a strong and unique position to continue to grow and build value in our combined company.”
The deal is another step in the transformation of Comcast from being purely a cable-system operator to being a global-entertainment conglomerate with interests in production of movies and TV, distribution across all traditional and digital platforms, ownership of TV stations, operation of theme parks and much more.
Last August, on the eve of the Summer Olympics, which were telecast on NBC, Roberts was asked by Businessweek about his vision for the combined companies. He said: “I believe television will change more in the next five years than in the last 50. This will be really great for consumers. At Comcast, we hope to help shape this future with the innovation we are driving through technology and our smart people. We are going to have a suite of products that you subscribe to -- television, high-speed Internet, phone, home security, energy management, maybe even health care -- and we are going to have many customers that are going to buy those products directly from us.“