Comcast (CMCSA), the nation's largest cable company, is reportedly in talks to buy NBC Universal, the entertainment giant, from General Electric (GE) in a blockbuster deal that -- if true -- would reverberate throughout the media world. Comcast, which has been on the hunt for a content-rich media company, has been scrutinizing NBC Universal's books for some time, according to the Los Angeles Times.
But Comcast denied a report from The Wrap's Sharon Waxman saying the cable giant had sealed a deal to pay $35 billion for NBC Universal. If consummated, the tie-up would marry NBC Universal's vast stable of content, from music to movies, with Comcast's giant digital-distribution network.
"While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate," a Comcast spokesperson said in a statement emailed to DailyFinance late Wednesday.
NBC Universal was similarly tight-lipped. "We have no comment," NBC Executive Vice President Allison Gollust told the Washington Post.
GE, which owns 80 percent of NBC Universal, is also said to be entertaining offers from buyers other than Comcast, including possibly Time Warner, the media giant that owns CNN and is itself the subject of speculation that it might spin off Time Inc., its storied stable of magazine titles.
French media giant Vivendi owns the remaining 20 percent of NBC Universal and has been weighing whether to sell its stake, an option it can excercise every year in November, per the 2004 deal with GE. News of the cable giant's interest may spur Time Warner, which is sitting on about $7 billion cash, to get off the sidelines. (Time Warner is preparing to spin off AOL, which publishes DailyFinance.)
Comcast, which has about $4 billion cash on hand, is hungry to gain control of a major media company in part because its new cable subscriber growth is slowing, but also to feed its ambitious plan to provide content "on-demand" through its cable pipes. Comcast has nearly 25 million cable subscribers.
If Comcast bought NBC Universal, the cable giant would gain control of a legendary -- if ailing -- broadcast network and movie studio, as well as several popular cable channels, including CNBC, MSNBC, Bravo and Telemundo, the Spanish-language station.
Increasingly, NBC Universal has been a drag on parent GE's earnings, and some shareholders have questioned why GE, an American industrial icon with a far-flung range of businesses including aircraft engines and financial services, is in the media game at all. In the second quarter of 2009, NBC Universal reported a 41 percent decline in profit and 8 percent drop in overall revenue. Wall Street analysts have valued the company at $30 to $35 billion.
NBC Universal's entertainment properties have certainly seen better days. The television network's ratings have been falling amid the proliferation of cable competitors and the general disintegration of the big three networks' long standing stranglehold of TV news and entertainment.
GE, which is perhaps most famous as a light-bulb manufacturer, first came to own NBC in 1986, when it acquired the network's parent, RCA, for $6.3 billion. The industrial conglomerate, whose long-standing motto was, "We bring good things to life," snapped up Telemundo for $2 billion in 2002, then picked up Universal for $5.4 billion in 2004.
News of the deal talks was first reported by Sharon Waxman, a former Washington Post and New York Times Hollywood reporter who has launched The Wrap, an entertainment news website based in Los Angeles.
The deal chatter comes nearly six years after Comcast's failed $54 billion bid for Disney (DIS). Ever since, Philadelphia-based Comcast has been on the prowl for a large media company with assets it could control and deliver through its massive cable network.
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