Is Comcast an NBC buyer?

Report: Comcast Buying NBC for $35 Billion. Comcast: “Inaccurate”
by Peter Kafka
Posted on September 30, 2009 at 6:23 PM PT
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Here’s the big media deal everyone has been waiting for. Or at least, here’s the report: Sharon Waxman of TheWrap says cable giant Comcast (CMCSA) is buying all of NBC Universal from GE (GE) for $35 billion.

The deal was hammered out by reps at a Tuesday meeting, Waxman reports, citing “two individuals informed about the meeting”. The $35 billion price tag happens to be the value that a recent JP Morgan report assigned to the company.

Comcast, in a statement, says the story is untrue: “”While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate.” NBC Univesal has no comment.

Clintonian parsers will note that Comcast’s denial has potential wiggle room: It isn’t denying, for instance, that the two companies had or are having talks. On the other hand, this is exactly the situation where corporate pr protocol calls for the “we don’t comment on market rumor and speculation” line. That way, you have the option to update your statement if the story does turn out to be true. And for what it’s worth, I can’t recall the last time I saw a big, publicly traded company respond to an M&A story with this specificity.

All that said, this is tie-up that has a first-blush logic to it: Comcast is flush with cash, and has shown an interest in branching out into content before — in 2004, it made a run at Disney (DIS). And the drumbeat for GE to dump its 80% stake in NBC U has been more or less constant, even while the industrial conglomerate insisted it had no interest in selling.

Those drumbeats get louder every year around this time, by the way. That’s because Vivendi, which owns the remaining 20% stake in NBCU, has a put option that kicks in every November, and which could theoretically force GE into buying out the stake or spinning the whole thing out to the public.

More theoretical ammunition for a deal: Comcast is one of the few potential buyers who could swallow up all of NBC U. While might be lots of people interested in NBC U’s cable properties (USA, Bravo, SciFi, etc) there aren’t many who also want the company’s flailing broadcast property.

And while Universal’s film library is potentially attractive to some buyers, many of them — like Time Warner (TWX), for instance — have no interest in the film studio, because they already have one.

If you want to play out the theoretical implications for digital, things could get very interesting. NBC is one of the founding partners at Hulu, the free Web TV portal that’s caused consternation for Comcast and other cable providers, who worry that the site is undermining the value of the TV programming they spend big money on. And Comcast and Time Warner have been trying out a “TV Everywhere” strategy that is in part a reaction to Hulu’s initial success. But let’s let the dust settle for a minute before we head in that direction.

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MY TAKE: While NBC is struggling and has lost major ground to the other networks, notably Fox, GE would be foolish to disband one of its greatest assets, particularly in a down market like this. $35 billion sounds like a lot of money, but remember, we're talking about NBC. Not to mention its affiliated brands, like, oh, the Olympics rights?

I'll believe it when I see it.