GE, Comcast Formalize NBCU Deal

PHILADELPHIA/FAIRFIELD: Comcast and GE have formally announced their agreement to form a joint venture—consisting of NBC Universal, Comcast’s cable nets, regional sports channels and some digital properties—to be led by Jeff Zucker.

The release from the two companies today said that the venture, to be 51-percent controlled by Comcast, will have the "proven capability to provide some of the world’s most popular entertainment, news and sports content, movies and film libraries to consumers anytime, anywhere." The cable networks and regional sports nets will serve as the core of the new venture, accounting for about 80 percent of its cash flow. The flagship brands include USA, Bravo, Syfy, E!, Versus, CNBC and MSNBC.

GE will contribute to the joint venture NBCU’s businesses valued at $30 billion, including its cable networks, filmed entertainment, televised entertainment, theme parks, and unconsolidated investments, subject to $9.1 billion in debt to third-party lenders. Comcast will contribute its cable networks, including E!, Versus and the Golf Channel, its ten regional sports networks, and certain digital media properties, collectively valued at $7.25 billion, and make a payment to GE of approximately $6.5 billion of cash subject to certain adjustments based on various events between signing and closing. This follows GE’s acquisition of Vivendi’s 20-percent NBCU interest for $5.8 billion.

Comcast’s chairman and CEO, Brian Roberts, said, “This deal is a perfect fit for Comcast and will allow us to become a leader in the development and distribution of multiplatform ‘anytime, anywhere’ media that American consumers are demanding. In particular, NBCU’s fast-growing, highly profitable cable networks are a great complement to our industry-leading distribution business. Today’s announced transaction will increase our capabilities in content and cable networks. At the same time, it will enhance consumer choice and accelerate the development of new digital products and services. GE has provided NBCU with a great home and has dramatically and positively transformed the business. We are honored that under this agreement Comcast would take over the stewardship of this important collection of assets and are absolutely committed to investing in NBCU and ensuring that it is a vibrant, financially strong company able to thrive in a rapidly evolving marketplace by delivering innovative programming. We are particularly pleased to be creating this new joint venture with GE and Jeff Immelt and to have their continued involvement."

“For Comcast, this transaction is strategically compelling and will generate attractive financial returns and build shareholder value,” continued Roberts. “It is also expected to be immediately accretive and will also allow us to maintain our strong commitment to returning capital to shareholders– all while increasing the scale, capabilities and value of our cable distribution, content and digital assets. Significantly, it is entirely consistent with our intense focus on value creation and our disciplined strategy of pursuing profitable growth in areas complementary to our distribution business.”

GE Chairman and CEO Jeff Immelt said, “The combination of Comcast’s cable and regional sports networks and digital media properties and NBCU will deliver strong returns for GE shareholders and business partners. NBCU has been a great business for GE over the past two decades. We have generated an average annual return of 11 percent, while expanding into cable, movies, parks and international media. We are reducing our ownership stake from 80 percent to 49 percent of a more valuable entity. By doing so, GE gets a good value for NBCU. This transaction will generate approximately $8 billion of cash at closing with an expected small after-tax gain. We have many opportunities to invest in our high-technology infrastructure businesses at attractive returns. I believe that the new NBCU will deliver value for both Comcast and GE in the future. We will give consumers and advertisers more choice and our cable and digital assets will be second to none. I am confident Brian Roberts and his team at Comcast will be great partners.”

Comcast simultaneously announced the creation of Comcast Entertainment Group (CEG), which will house its 51-percent stake in the JV and will sit alongside Comcast Cable.

Steve Burke, Comcast’s COO, noted: "Both Comcast and NBCU have excellent track records of integrating and growing multi-billion dollar businesses, including significant content acquisitions. In addition, we have both developed some of the country’s most popular programming and built many of the most watched and valued networks in the industry. We are confident that we’ll be even stronger together, and look forward to working with Jeff Zucker and the NBCU team to deliver the best consumer experience.”

Zucker, as CEO of the new JV, will report into Burke. He said of the deal: “Combining the assets of NBCU, ranging from our suite of cable properties and two broadcast networks to a legendary film studio and global theme park business, with the content assets and resources of Comcast, will enable us to continue to thrive in an ever-changing media landscape. Consumers of all of our products—on screens large and small—will have the benefit of enhanced content and experiences, delivered to them in new and better ways as a result of this transaction. This marks the start of a new era for NBCU, and I’m genuinely excited that I will be leading this wonderful organization, along with the Comcast team, at this important time in our history.”

The deal is subject to regulatory approval and could take more than a year to finally close.