It appears to be all over but the shouting for the combination of cable leader Comcast (NASDAQ:CMCSA) and NBC Universal, which has been 80% owned by General Electric (NYSE:GE). The deal, which has been lingering since late summer, should close within the next few days -- perhaps as early as Thursday -- since it appears that GE and Vivendi, the French conglomerate, have cut a deal wherein GE would pay Vivendi $5.8 billion for its 20% share in the programming company.
The total deal will value NBCU at about $30 billion. Once the transaction is completed, Comcast will control 51% of the newly combined entity, while the rest will go to GE. At the same time, as the deal is put to bed, control of the entity will be shifted from GE to Comcast. Current NBCU leader Jeff Zucker will continue in that role.
But what will be the benefits to the main players in the drama? From Comcast's perspective, the world's largest cable multi-systems operator will be able to compete more effectively with the likes of telephone companies Verizon (NYSE:VZ) and AT&T (NYSE:T) -- each of which has its own offerings of video, high-speed, and telephone service -- along with satellite video provider DirecTV (NASDAQ:DTV).
At the same time, it's long been apparent that Comcast's Brian Roberts covets content. I don't mind noting that, as a media analyst earlier in this decade, I forecast that Comcast would make a run at Disney (NYSE:DIS), an event that occurred (unsuccessfully) two years later in 2004. Nevertheless, with NBCU's stable of films and other forms of video, Mr. Roberts will be lined up with precious content at his disposal.
As for GE, the company's stock in trade has long been industrial goods, from aircraft engines to subsea oilfield equipment. As such, the transaction would allow it to return sensibly to its roots.
As you watch this deal unfold, keep in mind that media mergers frequently go sour quickly. I well recall the marriage between AOL and Time Warner (NYSE:TWX). What was supposed to be a superb and sensible coming together of "new media" and "old media" slid downhill almost from its inception.
So what's the best way to play this impending marriage? My inclination is to put away a few shares of GE -- the media space is a wasteland these days -- but allow yourself a lengthy investment time horizon in the process.
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