For weeks, we've been hearing talk about a partial acquisition by cable giant Comcast (Nasdaq: CMCSA) of the NBC Universal arm of General Electric (NYSE: GE). Finally, the deal 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 about $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, and CNBC, along with other outlets.
Comcast would have 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 on 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.
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