The Wrap's Sharon Waxman has some hot, hot, hot scoop: Comcast is in talks to buy NBC-Universal from General Electric.
As Waxman puts it:
NBC-Universal has been believed to be in play for months, although GE has publicly denied any intention of selling the unit. In recent weeks, minority stakeholder Vivendi has been apparently preparing to exercise its right to sell 20 percent of the entertainment company in an IPO.
Comcast has been among those rumored to be interested in buying that equity.
But the Tuesday meeting was about a much larger gambit, according to the knowledgeable individuals. The NBC-Universal division of GE, a premium content company, is a likely fit for the cable giant with its massive distribution pipeline. That is especially the case when the division's potential price tag has dropped significantly from a year ago.
Comcast’s market cap is $48.44 billion. NBC-Universal has fallen in value to an estimated $35 billion in value, from about $55 billion a year ago.
Of course, there's nothing official here, but Waxman is a great reporter, and if you read the whole story, it sounds like the deal is pretty far along. Nothing would please GE's Jeff Immelt more than a bidding war, of course, for the NBC-U property, but it's been clear for a long time that GE wants to sell.
As noted over the past couple of years here at The Cable Game, GE and NBC-U have never been a good fit. The whole purchase, going back to the 80s was then-GM CEO Jack Welch's accommodation to his subordinate, Bob Wright, who wanted to Go Hollywood, and couldn't find any way to do it, other than to get Welch to buy him a company. It was a lapse of judgment on the part of Welch, but it didn't matter all that much, in the bull market of the 80s and 90s, because everything was going up. But GE stock peaked a decade ago, today, it sits at around a quarter of its peak.
And NBC, currently #4 in the ratings--having fallen steadily under the "leadership" of Jeff Zucker--makes no contribution to GE stock price. And that's why Comcast, barely worth more than NBC-U, as Waxman calculates, could "buy" NBC-U. Normally, a $48 billion company would have a hard time digesting a $35 billion company, but GE will no doubt make it as easy as possible for Comcast to swallow NBC-U.
As chronicled here at TCG, GE was on a track to sell off NBC-U in late 2008. The plan was that Immelt & Co. would wait till after the Beijing Olympics last summer, and then the 2008 presidential election, and then unload the entertainment property. But then came the Wall Street meltdown, and all of a sudden, GE needed hundreds of billions in capital infusions to keep losses at GE Capital from sinking the whole company. The Barack Obama-ized federal government came through, and so all of a sudden, NBC, and in particularly MSNBC, which had moved way left in 2007-8, became a valuable asset once again, as a fancy lobbying tool to suck up to the new Obama administration. And it worked: MSNBC became the best media lapdog that a White House could hope to have, albeit a small media friend. (NBC was merely a friend to the Obamans, and CNBC, which had shown signs of conservative free-market thinking, during the Wall Street crisis, was brought to heel in 2009, albeit at the cost of its ratings mojo.)
But now, the economy seems to be getting better, and the sense of crisis has passed, so there won't be any more corporate bailouts. Which is to say, in Immelt's mind, MSNBC and NBC have served their purpose. But now, the situation has changed yet again. The Republicans are gaining strength--they seem poised to win both the governorships of New Jersey and Virginia this November, winning them back from the Democrats, and they have solid hopes of big gains in the 2010 midterms; perhaps they might even regain control of the House. In which case, the GOP will have real power to hit back at GE and its egregiously partisan "news" outlet, MSNBC.
So it makes perfect sense for GE to unload NBC and MSNBC before Republicans start looking for vengeance. GE might not get a very good price for NBC-U, but as noted, the real value of the NBC-U subsidiary was to help nail down those bailouts, and that mission was accomplished. So the main thing for GE is just to get out while the getting is as good as it will get.
So does that mean that Comcast, if the deal goes through, will inherit all of NBC-U's issues, including the ego-maintenance of Keith Olbermann, the signature player at MSNBC? Yup, that's exactly what it means. But the Comcast-ians are smart, they know what they are getting into. They might be content with MSNBC's lefty editorial line, or they might not--probably not, for reasons similar to the reasons why GE would wish to unload NBC-U.
But if Comcast does want to change it, they will be able to do so easily, since it's hard to imagine that Zucker, in particular, could survive at Comcast-NBC. And besides, most likely, Comcast is really interested in NBC-U's entertainment assets; the news units might well be regarded at Comcast HQ in Philadelphia as more trouble than they are worth. GE's Jack Welch always preached that if an operating unit of GE could not be first or second in a field, then GE had no business being in that line of business. MSNBC has violated that dicta forever, and yet it somehow survived, probably because of Bob Wright's lingering influence. That could change under Comcast's new-broom management.
OK, that's enough for now--after all, we don't even know for sure that this deal is going to happen. But in the meantime, it's a safe bet, fellow Cable Gamers, that everyone at MSNBC and CNBC is doing some radical career assessment--and perhaps some resume development.
