Comcast has agreed to buy a majority stake in NBC Universal from General Electric Co, creating a media superpower that would control not just how TV shows and movies are made, but how they are delivered to the home, reports the NY Times. Here’s how it unfolded.
GE cleared the way for the deal by securing Vivendi SA’s agreement to sell the company its 20 percent stake in NBC Universal for $5.8 billion. In May 2004, NBC acquired Vivendi Universal Entertainment to create NBC Universal. NBC assets including broadcast networks NBC and Telemundo, cable networks Bravo, CNBC and MSNBC, and television stations in major markets around the country. VUE assets included the Universal Pictures movie studio, theme parks in Hollywood and Orlando, and cable networks such as USA Network and SCI FI.
The cable heavyweight will own 51 percent of the venture, and General Electric will own 49 percent. Jeffrey Zucker, who has been president and CEO of NBC Universal, will lead the joint venture. Comcast plans to contribute about $6.5 billion in cash. The deal valued NBC Universal at about $30 billion.
Comcast is the largest U.S. cable service provider with 25 million television subscribers in 39 of the fifty U.S. states and 15 million broadband customers. The NBC acquistion would enable the cable giant to deliver programming to TV sets, personal computers, or mobile devices.
But the deal is controversial. Some think the NBC acquisition is visionary while others say it compares to the disasterous AOL/Time Warner merger in 2001. Critics, including some of Comcast’s own shareholders, suggest there is too little overlap between the businesses to draw out meaningful savings.
For GE, the deal allows it to concentrate on its industrial business, and could be the first step in a full break with NBC Universal, ending a relationship that stretches back to the dawn of television.
The Comcast businesses that will be part of the deal — including E!, Versus, the Golf Channel and 10 regional sports networks — are valued at $7.25 billion
The deal is likely to be scrutinized by government regulators, namely the U.S. Department of Justice and the Federal Communications Commission, notes C/Net.
Sen. Herb Kohl (D-Wis.), who heads the Antitrust and Competition Policy Subcommittee, said he will hold a congressional hearing to assess the merger’s impact on diversity in programming and on how people access media content on the Web.
“A vertically integrated Comcast/NBC would not only control marquee television and movie content, it would also control the primary avenues for distributing that content: a major television broadcast network, a major cable system operator and a major broadband Internet access provider,” said Mark Cooper, research Director at Free Press (pdf).
Politicians taking sides on Net neutrality issues and the national broadband plan may find it easy to bash Comcast over media ownership, a la carte billing, retransmission consent, and cable prices. The deal may also have an effect on online video services, such as Hulu, which is owned by NBC, News Corp., and Walt Disney Company.
In 2002, Tina Fey, the head writer and a performer on Saturday Night Live pitched a show that became 30 Rock, originally as a sitcom about cable news. NBC Entertainment president Kevin Reilly felt that “Fey was using the news setting as a fig leaf for her own experience and he encouraged her to write what she knew.”
