Comcast Announces NBC Universal Deal
RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News.
I'm Renee Montagne, with news this morning of a major media deal. Comcast, the nation's largest cable provider, is buying a controlling stake in NBC Universal, which has broadcast and cable networks, and a movie studio, too. This promises to make Comcast one of the nation's most powerful players in news and entertainment.
NPR's David Folkenflik joins us from our studios in New York City to tell us more about the deal.
DAVID FOLKENFLIK: Good morning, Renee.
MONTAGNE: Let's start with how the deal works.
FOLKENFLIK: Well, the deal values the company about $30 billion, and Comcast is buying a controlling 51 percent stake from GE, and it's expecting to buy out the remaining stake over time. GE made this possible by buying out the stake of its former minority partner, Vivendi.
MONTAGNE: And what's in it for Comcast?
FOLKENFLIK: Well, Comcast has long wanted control of actual content that is coursing through, for lack of better words, its tubes. It had failed, in an earlier pursuit, for Disney Company and ABC, seeking for the same reasons. You know, you can think, hey, NBC's pretty sluggish these days, but its cable channels - the USA Network, Bravo, CNBC and the others - provide great cash flow and profits. Also, it's hoping to put together, perhaps, its regional sports channels and its cable sports channels with the offerings of NBC Sports - like the Olympics, in particular - and thinking it could provide some sort of challenge to ESPN.
Some call this vertical integration - that is, it's going to own entertainment all the way - at every step through the food chain. And some say it's going to diversify. But there is this warning note, you know, if you think of synergy in entertainment, you think of the Time-Warner/AOL deal, and that's universally hailed as one of the worst corporate mergers of all time.
MONTAGNE: David, why did General Electric want out?
FOLKENFLIK: Well, it's been hit hard by the credit crunch of late, and it recognizes - Jeffery Immelt, the leader - that TV is not a core business. They had tough choices to make. NBC has not succeeded in righting the ship very well. And this is sort of a sign that cable is ascendant, and broadcast in some kind of decline. Nonetheless, Jeff Zucker, who led the network's news division well in the �90s and has had some real tough times this decade, is going to stay on for at least the first few years.
MONTAGNE: And for the rest of us, what does it mean for consumers?
FOLKENFLIK: Well when you think about this, Comcast is not only a major cable provider, it's one of the nation's leading broadband provider. You know, Comcast has been pushing the idea of video on demand and this idea of TV anywhere anytime. And the question is, are you going to have to buy, if you're in its markets, either cable or its broadband services to be able to buy some of its content that had been NBC Universal. NBC was a leading owner of Hulu. It's more likely that this will drive certain amount of content behind pay walls, although Comcast is promising to protect consumer interests. And obviously, this is going to trigger lengthy and significant regulatory review from the FCC and the U.S. Department of Justice.
MONTAGNE: David, thanks very much.
FOLKENFLIK: You bet.
MONTAGNE: NPR's David Folkenflik in New York, with news that the Comcast cable company is buying NBC Universal.
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