Wall Street: Comcast got a steal on NBCUniversal
NEW YORK — Is General Electric letting Comcast gobble up the NBCUniversal media empire at a bargain price? Wall Street thinks so.
“The Comcast folks feel like they got a steal,” said analyst Daniel Holland at Morningstar.
Matthew Harrigan at Wunderlich Securities said GE “mispriced” the $16.7 billion deal.
Wednesday's assessment on Wall Street followed a surprised announcement late Tuesday that Comcast Corp. agreed to buy GE's 49 percent share of NBCUniversal several years ahead of schedule. Comcast had bought 51 percent of NBCUniversal in 2011 and was going to buy out the rest from GE gradually, finishing in 2018. Comcast, the nation's largest cable TV provider, credited favorable interest rates and an attractive price for the new deal.
Doug Mitchelson at Deutsche Bank asked Comcast executives on a conference call Wednesday morning if they sweetened the deal somehow to get it approved by GE.
Comcast's chief financial officer, Michael Angelakis, responded that GE's board simply liked that the company could sell its stake earlier than expected.
“I think it's a very good deal for them as well,” Angelakis said Wednesday. “I think from their standpoint they're going to receive a lot of cash, which we know they're going to deploy to other services. And from our standpoint, I think it was an advantage to accelerate that, and I think we've received a very fair price.”
“Both of us think we got a good deal,” Keith Sherin, GE's chief financial officer, said on a separate call with investors. “And you can see the market likes it for both of us, which I think says that maybe we both did get a really good deal.”
NBCUniversal operates the NBC and Telemundo broadcast networks, local TV stations, cable channels such as USA, SyFy and CNBC, the Universal Pictures movie studios and theme parks in Florida and California. It generates about a third of the revenue for Philadelphia-based Comcast, whose larger business is producing the pipes for cable TV, Internet and phone services.
The deal, expected to be completed by the end of March, values NBCUniversal at $34 billion, not including $5 billion in debt. That's about 13 percent higher than two years ago, when Comcast's investment valued the company at about $30 billion, also excluding debt. By contrast, CBS Corp.'s stock price has more than doubled in those two years and the stock of ABC owner The Walt Disney Co. has risen 41 percent.
For GE, which is based in Fairfield, Conn., the deal accelerates a transition to a more purely industrial company, which investors have been wanting to see for a long time.
But the company does not need the cash. Long before this deal was announced, investors were wondering what GE was going to do with cash coming in from the company's operations. Now there's an extra $17 billion.
GE will buy back stock and issue dividends, but GE has a long history of acquiring companies at a voracious rate. “What do they want to buy?” asks Holland, the analyst. “That's the key question now.”
On the Comcast side, CEO Brian Roberts told The Associated Press after the deal was announced Tuesday that the company decided it made sense to buy GE's stake now because the improved performance of the NBC broadcast network and cable-TV programming made it more likely the price would rise in the future.
Thomas Seitz, analyst at Jefferies & Co., said Comcast was getting an “attractive” value for NBCUniversal, saying the price was just a small premium to the valuation and earnings of other big media companies such as Disney and Time Warner Inc.
Complete ownership will let Comcast benefit more from the rising price of sports rights and other TV programs. It avoids solely being in the uncomfortable position of passing those costs onto customers. And long-term rights deals between the TV networks and their cable and satellite distributors have ensured the importance of TV, even as Web video is on the rise.
Besides buying the rest of NBCUniversal, Comcast agreed to pay GE another $1.4 billion for other assets that include one of New York's best-known landmarks, NBC's headquarters at 30 Rockefeller Plaza.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Apollo-Ridge Education Foundation donates $12,000 to revamping middle school library
- Protesters won’t be thanking Wal-Mart
- Fatal crash closes Flight 93 chapel in Somerset County
- Steelers notebook: Roethlisberger says Saints game is ‘must win’
- Police on hunt for suspects in unrelated Penn Township, Manor cases
- Pregnant woman struck by van in North Side dies; doctors save baby
- Amusement parks fight off home entertainment threat
- Families welcome new members on Adoption Day in Westmoreland County
- Blairsville judge accused in hit-run set to enter program for 1st-time offenders
- Comeau’s hat trick leads Penguins; Crosby reaches career points
- Food drive volunteer in Westmoreland County has purse stolen