Comcast buys rest of NBC Universal for $16 billion
Comcast agreed to pay $16.7 billion for the remainder of NBC Universal, signaling chief executive officer Brian Roberts' confidence in the prospects for entertainment as a complement to cable distribution.
Comcast bought the 49 percent stake from General Electric more than a year ahead of its original plan, gaining full ownership of the NBC broadcast network, cable channels MSNBC and Bravo, and the Universal film and theme park businesses. NBC Universal's performance since Comcast acquired control in 2011 has made Roberts more "comfortable" with his bet on television, film and other content, he said in an interview.
"This is an attractive price for us and it gives GE a lot of cash," Roberts said in an interview. "We like the NBC Universal business."
Buying entertainment properties runs counter to decisions by peers Time Warner and Cablevision Systems, which decided to separate content from distribution. Roberts' gambit is an "inexplicably good deal" for Comcast because NBC Universal is still undervalued, Matthew Harrigan, an analyst at Wunderlich Securities Inc. in Denver, said in an interview.
"Comcast got it at a steal, a phenomenal price," said Harrigan, who recommends buying the stock. "NBCU is worth north of $40 billion if you turned around the movie studio and got the broadcast network to work."
The enterprise value of NBC Universal is now $39.1 billion, up from $37.5 billion when Philadelphia-based Comcast first bought a 51 percent stake for $13.8 billion, according to the company.
Comcast climbed 7.5 percent to the equivalent of $41.58 at 8:08 a.m. in German trading.
Comcast shares jumped as much as 9.1 percent to $42.50 in extended trading Tuesday after the deal was announced. The shares gained 0.9 percent to $38.97 at the close in New York and have advanced 4.3 percent so far this year. GE was up as much as 4.3 percent to $23.54, from a close of $22.58 in regular trading. The shares have added 7.6 percent this year.
NBC Universal CEO Stephen Burke said two years ago his top priority was turning around the network. For the ratings season that began in September, NBC is second in prime time to CBS Corp.'s network among the four major broadcasters, in both total viewers and the 18-to-49 age group that marketers target, according to Nielsen data. A year ago, the network was third in the younger age group and last in total audience.
While broadcast ratings have improved, NBC's reliance on football, which ended in January, and a single hit with "The Voice" expose a lack of depth through its schedule. After those, the network's highest-rated show is "Revolution" at No. 22 in Nielsen's household ratings. In the most recent week, NBC was last with one-third the 13.2 million average prime-time viewers of CBS.