Comcast CFO: Cable Giant Prepares for Possible 2014 Buyout of GE Stake in NBCUniversal

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Michael Angelakis also tells a Goldman Sachs conference about trends in pay TV subscriber momentum and programming costs.

Comcast will take its time to evaluate a likely deal to acquire at least half of General Electric's 49 percent stake in NBCUniversal in a couple of years, CFO Michael Angelakis said Wednesday.

GE has an option in 2014 that will allow it to force half of the stake, but Angelakis said depending on how NBCUniversal does, Comcast may buy out the whole stake. Analysts have recently put the value of the half at around $7 billion-$8 billion.

Speaking at the Goldman Sachs Communacopia Conference in New York in a session that was webcast, Angelakis said: "It is going to be a very interesting question for us in July 2014…to have a view on what we think the value of the asset is at that point in time and what it looks like going forward, what the value of our carried interest is at that point and what it could accrete to going forward. The key for us is to make sure we have the financial flexibility."

He added: "At this point, we have only been managing it for 19 months [with more than two years to go to make a decision]. The [NBCUniversal] team has done a terrific job of getting their feet on the ground and making lots of changes and creating some momentum, but I think it's premature to have that discussion."

Comcast has said it will prepare NBCUniversal to have the financial flexibility to buy up GE's stake with its cash position, which was recently strengthened by the $3.03 billion sale of Comcast's stake in A&E to Walt Disney and the Hearst Corp.
The $3.03 billion

Asked about Comcast's thinking about working with the likes of Apple and Google on its pay TV services, Angelakis said it is offering apps in partnership with the teach giants.

Time Warner Cable is understood to have talked to have discussed with Apple a possible deal that would see Apple control the user interface of cable set-top-boxes, leading to a question if Comcast was taking a different approach. "It is an important goal for us to provide the best video experience," Angelakis said. If a possible partner comes up with an interesting opportunity, "we are open to that discussion," he added. "I really don't think we have a difference of opinion compared to our peers."

Angelakis also highlighted that the company's cable systems have posted improved subscriber momentum in the last seven quarters, but said if housing growth returned at some point in the future, that would provide a nice tailwind for the business.

"I don't think we need housing growth," he emphasized though. Some analysts have suggested that Comcast could return to video subscriber growth in the coming quarters.

Asked about priorities, Angelakis said management's goal was to ensure "sustainable profitable growth" and balance average revenue per user and subscriber unit growth although it ideally wants to grow both.

Will programming costs, which have been rising strongly in recent years, will come down eventually? "I don't think we are going to see [that]," he said.

Questioned about his appetite for acquisitions, Angelakis said right now Comcast is focused on spending its cash on stock buybacks given that recent acquisitions of privately held companies have come at prices that have shown a disconnect with public market values.

Discussing the usage of authenticated TV content online, Angelakis said: "We’re seeing more TV Everywhere use...the Olympics were a little bit of a game changer."

The Comcast CFO also once again reiterated the growth upside in business services, saying that developing market could be worth $20 billion-$30 billion over time.


Twitter: @georgszalai

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