After weeks of working on a deal to spin off GE’s NBC Universal [NBCU], General Electric (GE) and Comcast Corp. (CMCSA) have finally agreed to value GE’s media and entertainment arm, which has hit tough times alongside the rest of the media sector, at about $30 billion – including $9 billion of debt, The WSJ reported on its Web site, citing people familiar with the matter.
The two companies are now in the process of ironing out the final details of an agreement, which could lead to a deal this week for Comcast to take control of NBCU.
Under the terms being discussed, Comcast would contribute $4 billion to $6 billion in cash plus its cable network assets, and receive a 51% stake of NBC Universal. GE, which owns 80% of NBC Universal, and remains under pressure by investors to offload its stake, would retain 49% in the venture, at least initially.
If successful, the venture will create a media giant. Comcast is the largest cable operator in the United States. The co. provides Internet access and phone service as well as cable TV service, in addition to owning national and regional cable networks. NBC Universal on the other hand, owns broadcast networks and a portfolio of popular cable channels. Its assets include Bravo, USA and CNBC among others as well as a movie studio and theme parks.
The Journal notes however, that while the negotiations are in advanced stages, it is possible the deal could be delayed or unravel. One main sticking point for the agreement are negotiations with French media and telecom company Vivendi SA — which owns 20% of NBC Universal. Vivendi has not yet agreed to a deal between Comcast and General Electric. In addition, the French conglomerate has told GE that it wants to sell its entire stake this year. That valuation is still being discussed, according to people close to the negotiations.
Assuming Vivendi doesn’t blow up the transaction, regulatory approval would be required next.
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