Should Comcast (Nasdaq: CMCSA) and General Electric 's (NYSE: GE) NBC Universal actually make it down the aisle, it could be reminiscent of AOL 's acquisition of Time Warner (NYSE: TWX) earlier in this decade. I recall sitting with dozens of analysts and other interested parties at that time, while the managements of those two companies explained the impeccable logic behind the deal. But it didn't make sense to me then, and ultimately it didn't make sense to Mr. Market.

Now, as you've heard, the largest of the cable companies, with about 24 million subscribers, and one of the major broadcast networks -- albeit a struggling one -- are talking about a merger. But it's a combination that ultimately may not occur. Indeed, it's far easier for me to conjure up negatives for the deal than to defend a combination between the two companies.

And now here's ...
GE has owned NBC, which gave us the likes of Chet Huntley and David Brinkley, along with the "Today Show" and the "Tonight Show," since 1986. Comcast was started in Tupelo, Mississippi in 1963, when Ralph Roberts, the father of the company's current CEO Brian Roberts, and a pair of partners formed a tiny system with just over 1,000 subscribers. Last week the possibility of GE spinning off a portion of NBC Universal to a venture with a now infinitely larger Comcast was made public.

The combination would be complex, if not unwieldy. One scenario, apparently in the talking stages, would involve the formation of a private joint venture, with Comcast owning 51% and the remainder going to GE. The component parts would include Comcast's video, high-speed data, and telephone services, along with a couple dozen cable networks from both companies.

The latter would include Comcast's Golf Channel, Versus, and its E! entertainment, among others. NBC's contribution to the video area would include CNBC, along with some other networks and 10 local television stations from the across the country. It would also add the Universal movie studios. Comcast would also contribute its professional sports teams and a couple of sports arenas in the Philadelphia area. NBC Universal's theme parks in the U.S. and Japan would also be part of the package.

In search of content
It's long been clear that Brian Roberts, who has tripled Comcast's subscriber numbers in the past decade -- in part by spending $75 billion seven years ago for AT&T 's (NYSE: T) broadband operation -- covets content. In 2004 he made an unsuccessful effort to acquire Disney (NYSE: DIS) for around $50 billion. And while a deal between his company and GE is still in the early discussion stages, my belief is that, if not now, Comcast will eventually end up owning a content provider.

But what are the potential strengths and weaknesses of the combination now being talked about? Among the benefits would be the combination of the companies' cable networks. And Comcast would increase its ability to create -- and perhaps control -- its own content, although it could be forced to share that content with other outlets and competitors.

Cable shrinkage
The primary difficulty at Comcast and other operators these days is that cable itself is being shrunk by competition from the likes of Verizon (NYSE: VZ), and DirecTV (Nasdaq: DTV). In fact, the current growth at the cable multi-systems operators (MSOs) is coming primarily from additions to Internet access and telephone service. At the same time, NBC, like the other broadcast channels, is watching its advertisers switch to cable. Indeed, during the past year its audience slipped 16% among the prime viewing ages. Continued...