What has now become a weeks-long talk about a partial
acquisition by
cable giant
Comcast (Nasdaq: CMCSA) of the
NBC Universal armof
General Electric (NYSE: GE) appears to be
making some progress.
After considerable wrangling, the two sides have
apparently reached a means of valuing NBC Universal.
According to those close to the negotiations, the entity will
be judged to be worth in the vicinity of $30 billion. As the
deal stands now, Comcast would contribute its cable networks,
including E! Style, G4, The Golf Channel, and a group of
regional sports networks. And for its part, NBC Universal
would add in USA Network, Syfy, Bravo, CNBC, along with other
outlets.
Comcast would control a 51% stake and operational control
in the combination, with the remainder of the stake going to
GE. One of the potential difficulties in getting the deal
through is that, while GE owns 80% of NBC Universal, the
remaining 20% is owned by French media company Vivendi, which
apparently hasn't yet agreed to any sort of deal. Both
Comcast and GE are obviously hoping that the French company
exercises its annual option to have GE buy back its
stake.
Additional details include Comcast contributing $4 billion
to $6 billion in cash for the new operation, while the
venture would assume about $9 billion in debt. Indeed, enough
of the details have been hammered out between the companies
that, depending upon whom you listen to, the deal could be
completed as early as the end of this week or several weeks
down the road. Because of the debt load being contemplated
for the revised media company, representatives of GE and
Comcast met with the debt-rating agencies for an opinion on
the effects of the debt being considered.
As the acquisition draws closer, it's likely that
competitors of Comcast such as
DirecTV (Nasdaq:DTV) and
DISH Network (Nasdaq:DISH) will be facing a
behemoth of an opponent.
Let me now throw out a perhaps blasphemous contention. I'm
convinced that, while Comcast shares haven't set the world on
fire since the potential for a merger was announced, there's
money to be made in the biggest cable company going
forward.
For related Foolishness:
What's Inside Comcast's Shopping Bag?
Is DirecTV Hitting on Sirius?
2-Star Stocks Poised to Plunge: DISH Networks?
This article was originally published as
The GE-Comcast Deal Is Heating Upon
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