Did GE Just Make Comcast an Entertainment Powerhouse?
Pushing forward, ahead of timeline predictions, Comcast (NASDAQ:CMCSA) sealed the deal with GE (NYSE:GE) to buy out the rest of NBC Universal on Tuesday, giving it even more control of the network — though there are still limits in place.
In 2011, Comcast made its move to buy up most of NBC Universal, but GE still maintained a 49 percent minority stake in the broadcast company. Fortunately for Comcast, GE had been planning to eventually pull out of the entertainment business, and this exchange of power completed both companies’ plans.
To pave the deal over, Comcast paid $16.7 billion to GE — $11.4 billion with on-hand cash, $4 billion with unsecured notes, $725 million with subsidiary preferred stock, and $2 billion with credit facility borrowings. So, the amount paid by Comcast and the amount realized by GE could be slightly different…
Now, with full control of NBC Universal, Comcast is spreading its power in the entertainment market. As a cable operator, it brings its content to consumers and makes a fair bit of money there, posting earnings growth in the fourth quarter. NBC Universal, one of the nation’s most profitable networks, will give Comcast a much stronger stable of programming.
With a stable pipeline from content production all the way to distribution, Comcast now has a strong advantage in the media business, though it will not have unlimited control of NBC — an anti-trust concession it had to swallow to cement the deal — and NBC’s programming will still be available to other TV distributors fairly.
NBC Universal will make Comcast a far bigger contender for media creation and distribution — a combined business model that many others, like Netflix (NASDAQ:NFLX), have been getting involved with recently. And, though the immediate expense for Comcast was great, NBC Universal had revenue of $6.01 billion last year, which could quickly help defray Comcast’s costs.