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Breaking News: Comcast in Talks to Buy Major Stake In NBC-Universal: Cable Subscribers Effectively Foot the Bill

Phillip Dampier October 1, 2009 Comcast/Xfinity, Online Video 11 Comments

The Wrap last night reported that Comcast, the nation’s largest cable company, was deep in talks to purchase a [potentially controlling interest in NBC-Universal, a report Comcast was disputing as of late last night.

Comcast, the nation’s leading provider of cable, entertainment and communications products and services, is in talks to buy the entertainment giant NBC-Universal from General Electric, according to knowledgeable individuals.

Deal points were hammered out at a meeting among bankers for both sides in New York on Tuesday, executives familiar with the meeting said.

Two individuals informed about the meeting said that a deal had already been completed at a purchase price of $35 billion.

A spokeswoman for NBC-Universal had no comment. Comcast responded with this statement: “While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate.”

Bloomberg News also reported interest by Comcast in a deal with two of NBC-Universal’s owner-partners: GE and Vivendi of France.  But they noted that three unnamed people with knowledge of the deal claimed Comcast would acquire only a 50% stake in the company, not 100% control, contingent on Vivendi selling its 20% stake to Comcast.

If such a deal were concluded, the NBC television network, two cable news channels, The Weather Channel, and Universal Studios would effectively be under the Comcast umbrella.  Comcast, already the nation’s largest cable company, would have a major ownership interest in a large television content-producing family of companies.  Cable companies have recently feared being owners of “dumb pipes” in an increasingly concentrated entertainment marketplace, and a deal with NBC-Universal would allow Comcast to have ownership of a significant amount of the content they distribute over their cable television and broadband networks.

TV Everywhere, a pet project of Comcast and Time Warner, leverages video content from cable networks distributed to “authenticated” cable or pay television subscribers over broadband networks.  Content owners have had the liberty to govern the terms and conditions of the distribution of their content within the scope of the project.  Outright ownership or control of the content by cable companies provides a much more predictable outcome.

Who foots the bill for an estimated $35 billion dollar investment in a completed deal for NBC-Universal?  Comcast customers, of course.

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Currently there are 11 comments on this Article:

  1. Paul says:

    “Who foots the bill for an estimated $35 billion dollar investment in a completed deal for NBC-Universal? Comcast customers, of course.”

    Comcast shareholders foot the bill. Comcast customers pay for a service.

    • Are you actually trying to tell us the inevitable debt servicing that will come from financing this deal will not be a cost of doing business that will be paid by all Comcast customers?

      Someone should tell FairPoint because they are on the verge of bankruptcy as they continue to lose business, and can’t simply raise rates on customers to make up the difference… yet.

      • Paul says:

        Yes that is exactly what I am saying. Comcast will price their ISP and Video service at a rate they think people will pay. I don’t believe that they will use one line of business to prop up another. For the shareholders its different which is why their stock price dropped today. It wasn’t the Comcast subscribers canceling in droves on this news, it was concern about returns.

      • Uncle Ken says:

        Phil I don’t understand your comment. Comcast users will be picking
        up the tab with higher costs. It is true the shareholders would take
        what looks like the first hit but they have options. Dump their comcast
        stock (safe and easy) Sit down and figure out how long before that 35
        million is returned and if they are willing to wait that long and will have
        to also think of what is in it for then in the end. Will their stock double
        in an expanded business if they hold out. That 35 million will have to
        come from someplace and it will not be from the stockholders. That
        is obvious. These things do not happen overnight. For stock holders
        there is always insider knowledge, word on the street on wall street.
        If enough share holders dump their comcast stock this deal may never
        happen if they feel the risk vs reward is not good enough.

  2. BrionS says:

    This may not be completely true anyway. NPR is reporting that Comcast is denying a buyout deal but stopped short of saying they’re not interested.

    http://www.npr.org/blogs/thetwo-way/2009/10/comcast_says_reports_that_its.html
    ( NPR’s source is Reuters: http://www.reuters.com/article/asiaMergersNews/idUSN3023145420091001 )

  3. Greg says:

    Could this be a good thing?? Maybe Comcast realizes the future of overcharging schemes and wants to make it’s money from content instead of trying to leverage higher profits on dumb pipes??

    • No, they’ll do both. I can understand the desire to position themselves as a content owner. Time Warner/Cable used to be a unified company that had cable properties and content. They are now friendly, individual entities.

      My experience tells me this will be more about leveraging control. Content they can own and manage is more valuable than content they simply deliver. If they succeed in their lawsuit to toss out the program exclusivity bans the FCC enforces against them, they can technically deny competitors access to their owned networks. That was what we were fighting about back in the 1980s.

      I am very concerned about a cable company like Comcast also owning a television network and a few news channels. I think abuse is likely to come from that kind of arrangement.

      • BrionS says:

        Media consolidation (or conglomeration depending on how you view it) is a bad idea in general from a competitive aspect.

        Where at one time any given town had a newspaper, a radio station, and a tv station that were all separate entities vying for the consumer’s money by providing the best news coverage and/or more entertaining content we now have a single entity (like ClearChannel or Infinity) that provides radio, TV, and in some cases newspaper (Rupert Murdoch comes to mind) with no incentive to actually compete.

        Every time I hear about any media companies merging or buying one another out I shed a metaphorical tear for our media.

  4. Uncle Ken says:

    Brion: Once apon a time a long time ago I thought newspapers would
    show up on CD’s. We were going through a time when analog and
    digital papers were at the 50 percent point. My thoughts were stupid.
    The next natural thing to do was get rid of the middle man. The D&C
    will not be around that much longer. It will go digital and they will try
    to charge for it. It will fail given that it is not that good in any form. I see
    you long for the old hand set type printing press, A backbone of our
    country and that is a good thing. We lost lots of good things.

    • BrionS says:

      There’s something to be said for newsprint as it was (I’m thinking about silly putty + newspapers — something many kids these days have never experienced). However I wouldn’t say I long for the hand set printing press. All I really want is honest competition in the media sector.

      I’m not sure if you listen to the radio these days but one channel to the next it’s the same commercials, the same format only slightly different songs. The only stations that have different and interesting content are the college radio stations, the independent stations, and public radio. I now listen to WXXI, WRUR, and WBER primarily and only if nothing is on I like will I flip to WZNE or WXFX because the music they play is only the most popular of their genre and the playlists are interrupted with endless commercials. I like no commercials on public and college radio and happily donate to keep them operating that way.

      If there were a municipal broadband option I would switch to it in a heartbeat because I’m sure it would cost less for at least as good of a quality connection as I have now (my connection is regularly reset on me interrupting Skype calls and online gaming – so very infuriating). Too much competition is never a bad thing.







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