Global Biz
Comcast aims to reshape entertainment with NBC
(Agencies)
Updated: 2009-12-04 01:57
PHILADELPHIA: Comcast Corp. announced Thursday it plans to buy a majority stake in NBC Universal for $13.75 billion, giving the nation's largest cable TV operator control of the Peacock network, an array of cable channels and a major movie studio.
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 In this Aug. 6, 2009 file photo, the Comcast logo is displayed on a TV set in North Andover, Mass.[Agencies]
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Comcast, which serves a quarter of all US households that pay for TV, would gain control of the NBC broadcast network, the Spanish-language Telemundo and about two dozen cable channels, including USA, Bravo, Syfy and The Weather Channel. It also would have regional sports networks, Universal Pictures and theme parks.
Shares of Comcast jumped 96 cents, or 6.4 percent, to $15.90 in morning trading Thursday, as the company also announced an increase in its dividend.
In agreeing to buy 51 percent of NBC Universal from General Electric Co., which has controlled NBC since 1986, Comcast hopes to succeed in marrying distribution and content in a way Time Warner Inc. could not. AOL and Time Warner are undoing their ill-fated marriage Dec. 9, and Time Warner has already shed its cable TV operations.
Comcast's Roberts and GE CEO Jeff Immelt have been discussing the deal for months, and the final weeks came down to GE's persuading French conglomerate Vivendi SA to first sell its minority stake.
Comcast made the deal because it is eager to diversify its holdings. It faces encroaching threats from online video and more aggressive competition from satellite and phone companies that offer subscription TV services.
For entertainment viewers, the deal means Universal Pictures movies could get to cable faster.
TV shows could appear on mobile phones and other devices faster as part of Comcast's plans to let viewers watch programs wherever they want. Comcast already is letting subscribers watch cable TV shows online in trials, with a nationwide launch in December.
On Thursday, Comcast pledged that NBC Universal shows that now cost money over its cable video-on-demand service would be free for three years after the deal closes.
Comcast also said it would maintain free, over-the-air TV on NBC stations - a business model that is eroding because of falling advertising revenue. Comcast also pledged to improve public interest programming. And it said it would not let its business interests affect NBC News.
But consumer advocates worry about the deal, saying people could end up paying more for TV.
Once Comcast controls NBC Universal, other subscription-TV operators - DirecTV, Verizon, Time Warner Cable, to name a few - would be negotiating with a rival on how much they have to pay to carry NBC broadcast and cable channels. An NBC Universal under Comcast might be less willing to budge than one under GE. Consumer groups worry that as a result, programming fees that are already creeping up could rise even faster, with the costs passed to customers in their monthly pay-TV bills.
NBC Universal is profitable, with operating earnings of $1.7 billion on revenue of $11.2 billion in the first three quarters of 2009, despite weakness in the fourth-place NBC broadcast network and Universal Pictures, ranked sixth in North American box office gross this year by Rentrak Corp./Hollywood.com.
Comcast wants the company largely for its cable channels - which are expected to provide about 80 percent of the new venture's profit. Comcast is seeking more programming to beef up its video-on-demand offerings and rely less on cable revenue as the company loses subscribers to rival providers - such as phone companies that are offering TV services - or the Internet.
