Cable Giant Comcast Buys NBC Universal Comcast announced Thursday a deal to become majority owner of NBC Universal. The deal gives Comcast control of NBC, the Spanish-language Telemundo and about two dozen cable channels.
NPR logo

Cable Giant Comcast Buys NBC Universal

  • Download
  • <iframe src="https://www.npr.org/player/embed/121063954/121063936" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Cable Giant Comcast Buys NBC Universal

Cable Giant Comcast Buys NBC Universal

Cable Giant Comcast Buys NBC Universal

  • Download
  • <iframe src="https://www.npr.org/player/embed/121063954/121063936" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Comcast announced Thursday a deal to become majority owner of NBC Universal. The deal gives Comcast control of NBC, the Spanish-language Telemundo and about two dozen cable channels.

MELISSA BLOCK, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

First this hour, we're going to dig into the deal that could create the most powerful entertainment company in the country. Comcast is already the nation's leading cable provider. This morning it announced plans to buy a controlling interest in NBC Universal from General Electric. The combined venture is valued at roughly $30 billion. In a moment, we'll explore what regulatory obstacles might stand in the way of the deal. First, with the latest, here's NPR's David Folkenflik.

DAVID FOLKENFLIK: GE agreed to give Comcast 51 percent of the company for just $6.5 billion in cash and intends to shed its entire stake in coming years. So Comcast would now own a broadcast network with such stars as Brian Williams of the "NBC Nightly News."

(Soundbite of TV show, "NBC Nightly News")

Mr. BRIAN WILLIAMS (Journalist): It was five years ago this very night when I took over this job from Tom Brokaw.

FOLKENFLIK: Such signature dramas as "Law & Order SVU."

(Soundbite of TV show, "Law & Order SVU")

Unidentified Man: Los Zetas, the Gulf cartel's assassination wing.

FOLKENFLIK: And such famous comics as Conan O'Brien.

(Soundbite of TV show, "The Tonight Show with Conan O'Brien")

Mr. CONAN O'BRIEN (Host): Yeah, that cadet was immediately assigned to work security at the next White House state dinner. Going to be there.

(Soundbite of laughter)

FOLKENFLIK: But the real headline here is the cable portfolio, including Bravo, the USA Network, SyFy, CNBC, MSNBC and others, which, taken together, generate a tremendous amount of cash flow and profits. Comcast's CEO and chairman Brian Roberts told reporters the deal was good for the company and for the public.

Mr. BRIAN ROBERTS (CEO and Chairman, Comcast): It's pro-consumer. It's going to accelerate, really, I believe, what consumers want, which is access to all the different types of content on different platforms at different times.

FOLKENFLIK: Here Roberts was talking in part about Comcast's TV Everywhere project, allowing people to watch video on demand online if they are cable or Internet subscribers. Comcast is not just a cable system giant, but a leading broadband Internet provider as well.

Mr. ROBERTS: There's a transition happening from physical to electronic delivery in all forms of media and this is going to play a big role in helping to make that really good for consumers.

FOLKENFLIK: And then Roberts added one more thing.

Mr. ROBERTS: It's a vertical integration deal.

FOLKENFLIK: Vertical integration. What Roberts is saying is that Comcast would own the studios that produce movies and TV shows as well as the networks, cable channels and Web sites running that content. And additionally, it would own the cable or broadband Internet providers delivering those shows to your televisions or computers. That's a pretty classic definition of soup to nuts.

Mr. BEN SCOTT (Program Director, Free Press): In the case of Comcast and NBC, the combination of these two players, who are both amongst the largest of their type in the industry, is unprecedented.

FOLKENFLIK: That's Ben Scott, program director for the public interest advocacy group, Free Press. He wants the Federal Communications Commission or the U.S. Justice Department to block the deal.

Mr. SCOTT: That kind of control on the industry is very worrisome to us. We think it runs afoul of antitrust standards and certainly runs afoul of the public interest standard in communications law.

FOLKENFLIK: Theoretically, Comcast could slow the delivery of online movies from rivals such as Netflix or charge cable competitors sky-high fees for carrying its shows. But Craig Moffett says Comcast is unlikely to gouge either competitors or consumers. Moffett is a senior analyst at the Sanford C. Bernstein investment company.

Mr. CRAIG MOFFETT (Senior Analyst, Sanford C. Bernstein): I've always been skeptical of whether or not there's any there there in the concept of vertical integration. It's not like it's something that hasn't been tried before. It's been tried by Time Warner and lots of others and never with very much success.

FOLKENFLIK: Internet pioneer AOL's takeover of the publishing and TV giant Time Warner was disastrous and it cracked apart. Moffett says Comcast is instead focus on the idea of steady profits from the vibrant NBC Universal cable channels.

Mr. MOFFETT: Brian Roberts and Comcast see this as simply an attractive opportunity to buy an interesting set of assets.

FOLKENFLIK: Comcast promises to protect consumer interests and the integrity of NBC's news division. And NBC's current chief, Jeff Zucker, will continue to lead the new joint venture, assuming the deal goes through.

David Folkenflik, NPR News, New York.

Copyright © 2009 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Comcast To Buy 51 Percent Stake In NBC Universal

If the deal clears regulatory and other hurdles, Comcast would rival the heft of The Walt Disney Co. — which Comcast CEO Brian Roberts already tried to buy. Mark Lennihan/AP hide caption

Timeline: NBC And Comcast: A Rich History
toggle caption
Mark Lennihan/AP

Comcast announced early Thursday that it will buy a controlling stake in NBC Universal in a deal valued at roughly $30 billion, setting up the Philadelphia-based cable company to achieve its ambition of becoming one of the nation's most powerful entertainment companies.

Comcast is not only the nation's top cable provider, serving about 24 million households, but is also one of its leading broadband Internet providers, with nearly 16 million subscribers.

Assuming the deal passes regulatory review by federal agencies, Comcast will acquire the struggling NBC broadcast network, the movie studio Universal, 10 local stations, the Spanish-language Telemundo channel, and cable channels Bravo, CNBC, MSNBC and SyFy. In addition, it will take control of NBC's stake in the entertainment Web site Hulu, which provides high-quality online movies and TV shows — currently at no cost.

The deal for a 51 percent stake in NBC Universal involves relatively little cash, as General Electric would receive about $6.5 billion. Instead, Comcast is contributing its regional sports and news networks, as well as its cable channels: the E! entertainment and gossip channel, the Golf Channel and the sports channel Versus.

Heard On NPR

"With this transaction, I believe our company is strategically complete," Comcast Chairman and CEO Brian Roberts told investors in a conference call this morning. "We believe that we have put together with GE a smart and elegant structure that aligns our interests and unlocks value in our programming assets."

Roberts hardly alluded to the NBC network in his initial remarks, repeatedly citing the strength of the NBC Universal cable channels as the engine driving the deal. He said consumers could expect to enjoy entertainment in new ways from the new joint venture.

"We think the combination of both is going to be a winner for our shareholders and our customers," Roberts said.

Comcast had failed several years ago in its effort to take over ABC and its parent company, the Walt Disney Co. But analysts say Comcast is well poised to make this purchase, as it is carrying relatively little debt and is acquiring cable properties that are providing significant annual revenues and profits.

"There's an interesting intersection between content and distribution that Comcast has always hoped to capture in a bottle," says Craig Moffett, senior cable satellite and telecommunications analyst at the investment company Sanford C. Bernstein. He pointed to video on demand, in which Comcast has been a leader. It could push to make movies from Universal studios available on demand the same day it they hit theaters.

In addition, Moffett said Comcast could pose a threat to rival cable giant ESPN by blending its regional sports and cable sports channels, and the programming of NBC Sports in football, golf and especially the Olympics.

But Moffett pointed out that the Comcast deal involves ignoring a recent history of big media mergers. The AOL-Time Warner deal is now widely seen as having been a disaster.

"I've always been skeptical of whether there's any there there in the concept of vertical integration," he said. "It's been tried by Time Warner and others and not with very much success.

"At its heart though, Brian Roberts and Comcast see this as an attractive opportunity to buy an interesting set of assets," he added. "While I don't want to discount the vertical integration opportunities, there's a lot of this that has the smell of simple diversification — that is, they're buying a business that they happen to like."

Advocates and opponents alike say the role the new Comcast would play in the media landscape cannot be understated. A combination means the company will own a significant piece of the nation's entertainment, news and possibly sports programming on the local and national levels — both on TV and online, free and for a fee.

As a result, the deal is expected to go through lengthy regulatory review, both from the Federal Communications Commission and from the U.S. Department of Justice's antitrust division.

Ben Scott, the policy director for the public interest group Free Press, said Comcast would hold too much power over entertainment and TV news by controlling both significant content and the means by which it is delivered to viewers.

"In the case of Comcast and NBC, the combination of these two players who are both amongst the largest of their type in the industry is unprecedented," Scott said. "They will have an unprecedented grip of market dominance on those three sectors: Internet service, broadcasting and cable."

Free Press is among the many advocacy groups seeking to get regulators to block the union.

"That kind of control of the industry is very worrisome to us," Scott said. "We think it runs afoul of antitrust standard and certainly runs afoul of public interest standard in communications law."

Scott asked whether viewers might find themselves unable to watch TV programs or movies owned by NBC Universal if they didn't subscribe to Comcast's cable or broadband Internet services in areas where they are available.

And he raised additional scenarios. NBC is one of the key owners behind Hulu, the entertainment Web site where people can watch high quality streams of network and cable shows and movies. It is expected to put some of its material behind a pay wall. So Scott asks whether Comcast's broadband service might slow downloads or streams from competing online entertainment services, such as Netflix. Conversely, Comcast could charge rival cable companies more to carry content from NBC Universal's popular cable channels — a cost that might be passed along to subscribers.

Comcast took pains in Thursday's announcement to underscore what it said were protections being offered to viewers that most of its content would be available for free and that non-Comcast customers would not be prevented from seeing its newly obtained programs.

The deal was forged over months of negotiations between GE Chairman and CEO Jeffrey Immelt and Comcast founder Fred Roberts and his son Brian. It hinged on GE buying out the 20 percent stake of its previous minority partner, the French conglomerate Vivendi, for $5.8 billion. And while GE retains a 49 percent stake in the company, it is expected to sell it off in coming years.

GE has been hit hard by the recent credit crunch. Immelt had acknowledged that television was not a core business for the financial and engineering conglomerate. NBC has not been able to rouse itself from its fourth-place finish in prime-time networks, despite the strength of NBC News. And he decided it was not worth the distraction.

NBC Universal Chairman Jeff Zucker will stay on to lead the entertainment venture and will report to Comcast's chief operating officer, Steve Burke.

In a memo to NBC employees, Zucker wrote, "In this joint venture we will have a new parent that is a pure media company with an unsurpassed distribution business. And they are committed to growing and investing in NBCU."