Comcast Pitches NBC Deal to Investors: Check Out Our “Wow Chart”!

Comcast (CMCSA) investors have been upset with the company ever since its plans to acquire control of NBC Universal from GE (GE) appeared in September. Now’s the time for the company to start wooing them back (at least publicly).

On the call: CEO Brian Roberts, COO Steve Burke, CFO Michael Angelakis

Roberts: Deal will make us “strategically complete”. [We promise not buy anything else!]

Obligatory praise for Jeff Zucker for “completely transforming NBC into one of the premier cable operators in the business”, which is the same way Zucker likes to describe himself.

This deal is so incredibly easy for us to finance that we’re increasing dividend by 40 percent. [Also, we're doing this with both hands tied behind our back!]

Angelakis: If you get confused, there’s an appendix at the end of our presentation.

Did you know that Fandango was a “female-oriented” site? Me neither.

Comcast has “clear path to control” JV, by buying out GE’s interest, but has capped future payouts at $5.75 billion.

Debt ratings agencies have signed off on this, so don’t worry. They never get this wrong.

Back to Roberts:

Can’t stress this enough: We’re not buying a faltering film company and a flailing broadcaster – we’re buying a bunch of profitable cable channels. Cable channels. Cable channels.

Also, we’re buying at the bottom of the cycle, so some of the duds that we’re buying may end up having upside. He is right about this, by the way: Networks really do rise and fall over time, almost independent of what management does. Remember ABC’s peril in the pre- “Lost” era?

Oh yeah. There are some theme parks, too.

OK. Back to the deal. Cable channels. Cable channels. Cable channels. They are great. We love them. Affiliate fees growing 12% a year, ad sales up 7% a year. Check out the awesome slide on page 19. “I think this is a wow slide”.

comcast wow slide

Some more praise for Zucker.

Cable channels. Cable channels. Cable channels. We love the ones we one, but they’re “sub-scale” compared to what we’re buying from GE.

We’re going to cross-promote the heck out of these, and figure out how to make G, Style and Versus more valuable, like NBC U does with Bravo, etc.

We’re about 40 minutes into the call, and this is the first discussion of the Web. JV will be a top 10 company with 82 million uniques.

At least for now, Comcast still talking about “On Demand Online”, not XTREME ONLINE RAWKS of whatever they’re supposedly going to call it.

More color on new business you can create once you combine, please. Also, what are you going to sell off?
Burke: “Literally dozens of innovative ideas that come out of this combination”. Like interactive advertising. Targeting, etc (via cable, not Web). Can launch new channels, new VOD packages, move windows. A lot of opportunities.
Roberts: We don’t plan on selling anything. But “we have a long time between signing and closing” to learn about assets we’re buying.

A lot of people have tried vertical integrations like this, and they haven’t worked. What’s going on here. Also, how are you going to work with businesses like Hulu, which threaten your business?

Roberts: Some of these have worked. Think of Malone’s deals. Or Time Warner buying Turner. Or even News Corp. and DirectTV. Anyway, that’s the past. Let’s look to the future. More important is that we believe deal works with zero synergy benefits (that’s for you, Jeff Bewkes).

Um, anyone else get bumped off call? Nope, just me. Apologies, will go get the Hulu answer later, but I’m guess it was something along the lines of “we love Hulu and have no intent to crush it like a bug, and also we’re one of three networks who will own it.”

Please explain how you’ll negotiate for, say, the Olympics or other assets, when you don’t actually own NBC yet.

Roberts: Jeff (Immelt) and Jeff (Zucker) will have to run their business until the deal closes.

Regulatory hassle?

No worries, says Roberts. This is a “pro-consumer transaction”. And check out all the things we said to that effect earlier this morning.

Burke says both local and national advertising recovering.

Analyst notes that GE’s never told us much about NBC U, because it hasn’t had to. So we’re going to get a much better look at how the business works going forward.

Why are you sticking your regional sports deals into this JV. Also, why not just hand the money you’re spending on this deal back to investors, via share buybacks?

Burke (I think): When you think of sports, its hard not to think of NBC sports and Dick Ebersol (ahem). Also, we think there’s some synergy with some of NBC’s local broadcast stations.

Angelakis (I think): We’ve already bought back $14B worth of stock in 6 years, and we’ll keep buying back stock. Also, check out our dividend. But we need a balance. This deal gives us financial returns and long-term strategic returns.

Roberts (I think): Timing is good. Size is appropriate – we can handle it. “You gotta like the business…we think it’s a reasonable risk. That’s what we’ve always done at Comcast”.

Regulatory risk? If Washington wants us to make a really really serious change that blows up rationale for doing this, we have ability to back out. But we don’t think that’s going to happen.

Is there a break-up fee? No.

What does this mean for TV Everywhere/On Demand Online? (and Hulu)?

Burke: NBC has been careful not to put too much cable content on the Internet. We think that’s a smart strategy, “not that they asked us”. We think that going forward, you’re going to continue to have free broadcast stuff on Hulu, and cable stuff on TV Everywhere.

Roberts: Windows in general, our focus has been on expanding offerings, putting it on multiple platforms. All of those things more likely to occur in a way that benefits distributors, content owners and consumers.

What about Hulu premium? “That’s certainly not in the cards”.

Here’s the pitch in chart form:


What Will Comcast Give Up to Get the NBC Deal Through Washington? Place Your Bets…

eightballComcast’s deal to buy half of NBC Universal from GE, first reported in late September, is now official, and the two companies are holding three conferences calls this morning to talk about it. But there won’t be much either company can say that hasn’t already made it into the press at this point.

Most important to remember here is that regulators will be hemming and hawing over this combination for many many months, so the actual transaction won’t take place until late 2010 or beyond. And by that point it’s certainly possible that some of the terms announced today will have changed, as Comcast seeks to mollify politicians who are worried — are at least say they’re worried — about the company’s clout.

Comcast has already announced (via this Bloomberg story) that it doesn’t intend to shed any assets to please Washington. But what else would it say? One likely scenario, according to cable executives I talked to this week, is that it will end up selling some of its cable systems to the handful of small cable operators that are still around.

In any case, completists can find the press release at the bottom of this post, but if you’re in a hurry I’d suggest this overview of the overviews from PaidContent, which includes nuggets like the following:

  • Comcast (CMCSA) started out the year by mulling deals to buy Facebook or Viacom (VIA).
  • GE (GE) and Comcast first broached the deal in Sun Valley media schmooze in July, and had agreed on the deal points by the end of that month.
  • News Corp.’s (NWS) Rupert Murdoch, who kept insisting that he wasn’t interested in inserting himself into the deal, kept at it through late October.

Positions Comcast and NBCU to Lead the Next Phase of Media Industry’s Evolution
Builds on Diverse Cable Portfolio, Accelerates Digital Offerings and Expands Customer Choice
Entity Will Deliver Strong Cash Flow With Conservative Capital Structure
NBCU Businesses Valued at $30 Billion, Comcast to Contribute Businesses Valued at $7.25 Billion
Comcast To Own 51%, GE 49% Interest in NBCU
Jeff Zucker to Lead New York-based Venture

PHILADELPHIA, PA and FAIRFIELD, CT – Dec. 3, 2009 – Comcast (NASDAQ: CMCSA, CMCSK) and General Electric (NYSE: GE) announced today that they have signed a definitive agreement to form a joint venture that will be 51 percent owned by Comcast, 49 percent owned by GE and managed by Comcast. The joint venture, which will consist of the NBC Universal (NBCU) businesses and Comcast’s cable networks, regional sports networks and certain digital properties and certain unconsolidated investments, will be well positioned to compete in an increasingly dynamic and competitive media and digital environment.
The combination of assets creates a leading media and entertainment company with the proven capability to provide some of the world’s most popular entertainment, news and sports content, movies and film libraries to consumers anytime, anywhere. The joint venture will provide consumers the broadest possible access to content, and support high-quality, award-winning content development across all platforms including film, television, and online. It will be anchored by an outstanding portfolio of cable networks and regional sports networks that will account for about 80 percent of its cash flow, including USA, Bravo, Syfy, E!, Versus, CNBC and MSNBC. The joint venture will be financially strong with a robust cash-flow-generation capability.
Under the terms of the transaction, GE will contribute to the joint venture NBCU’s businesses valued at $30 billion, including its cable networks, filmed entertainment, televised entertainment, theme parks, and unconsolidated investments, subject to $9.1 billion in debt to third party lenders. Comcast will contribute its cable networks including E!, Versus and the Golf Channel, its ten regional sports networks, and certain digital media properties, collectively valued at $7.25 billion, and make a payment to GE of approximately $6.5 billion of cash subject to certain adjustments based on various events between signing and closing.

Comcast Chairman and Chief Executive Officer Brian Roberts said, “This deal is a perfect fit for Comcast and will allow us to become a leader in the development and distribution of multiplatform ‘anytime, anywhere’ media that American consumers are demanding. In particular, NBCU’s fast-growing, highly profitable cable networks are a great complement to our industry-leading distribution business. Today’s announced transaction will increase our capabilities in content and cable networks. At the same time, it will enhance consumer choice and accelerate the development of new digital products and services. GE has provided NBCU with a great home and has dramatically and positively transformed the business. We are honored that under this agreement Comcast would take over the stewardship of this important collection of assets and are absolutely committed to investing in NBCU and ensuring that it is a vibrant, financially strong company able to thrive in a rapidly evolving marketplace by delivering innovative programming. We are particularly pleased to be creating this new joint venture with GE and Jeff Immelt and to have their continued involvement.
“For Comcast, this transaction is strategically compelling and will generate attractive financial returns and build shareholder value,” continued Roberts. “It is also expected to be immediately accretive and will also allow us to maintain our strong commitment to returning capital to shareholders– all while increasing the scale, capabilities and value of our cable distribution, content and digital assets. Significantly, it is entirely consistent with our intense focus on value creation and our disciplined strategy of pursuing profitable growth in areas complementary to our distribution business.”
GE Chairman and CEO Jeff Immelt said, “The combination of Comcast’s cable and regional sports networks and digital media properties and NBCU will deliver strong returns for GE shareholders and business partners. NBCU has been a great business for GE over the past two decades. We have generated an average annual return of 11 percent, while expanding into cable, movies, parks and international media. We are reducing our ownership stake from 80 percent to 49 percent of a more valuable entity. By doing so, GE gets a good value for NBCU. This transaction will generate approximately $8 billion of cash at closing with an expected small after-tax gain. We have many opportunities to invest in our high-technology infrastructure businesses at attractive returns. I believe that the new NBCU will deliver value for both Comcast and GE in the future. We will give consumers and advertisers more choice and our cable and digital assets will be second to none. I am confident Brian Roberts and his team at Comcast will be great partners.”
Comcast also announced the creation of Comcast Entertainment Group (CEG), which will house Comcast’s interest in the joint venture and will stand alongside Comcast Cable, which operates the company’s traditional cable business.
Comcast Chief Operating Officer Steve Burke said, “Both Comcast and NBCU have excellent track records of integrating and growing multi-billion dollar businesses, including significant content acquisitions. In addition, we have both developed some of the country’s most popular programming and built many of the most watched and valued networks in the industry. We are confident that we’ll be even stronger together, and look forward to working with Jeff Zucker and the NBCU team to deliver the best consumer experience.”
Jeff Zucker, current president and CEO of NBCU, will be CEO of the new joint venture and will report to Burke. Zucker said, “Combining the assets of NBCU, ranging from our suite of cable properties and two broadcast networks to a legendary film studio and global theme park business, with the content assets and resources of Comcast, will enable us to continue to thrive in an ever-changing media landscape. Consumers of all of our products – on screens large and small – will have the benefit of enhanced content and experiences, delivered to them in new and better ways as a result of this transaction. This marks the start of a new era for NBCU, and I’m genuinely excited that I will be leading this wonderful organization, along with the Comcast team, at this important time in our history.”
Headquarters for the business will remain in New York. The joint venture board will have three directors nominated by Comcast and two nominated by GE.
Key Elements Of The Transaction:
·         NBCU will borrow approximately $9.1 billion from third-party lenders and distribute the cash to GE.
·         NBCU, valued at $30 billion, will be contributed to the newly formed joint venture. Comcast will contribute its programming businesses and certain other properties valued at $7.25 billion.
·         GE will acquire Vivendi’s 20% interest in NBCU for $5.8 billion. GE will purchase approximately 38% of Vivendi’s interest (or approximately 7.66% of all outstanding NBCU shares) from Vivendi for $2 billion in September 2010, if the Comcast transaction is not closed by then. GE will acquire the remaining 62% of Vivendi’s interest (or approximately 12.34% of all outstanding NBCU shares) for $3.8 billion when the transaction closes.
·         Comcast will make a payment to GE of approximately $6.5 billion in cash subject to certain adjustments based on various events between signing and closing.
·         The new venture will be 51% owned by Comcast and 49% owned by GE.
·         GE expects to realize $9.8 billion pre-tax in cash before debt reduction and transaction fees and after buyout of the Vivendi stake. GE expects to realize approximately $8 billion in cash after paying down the existing NBCU debt and transaction fees.
·         GE will be entitled to elect to cause the joint venture to redeem one-half of its interest at year 3 ½ and its remaining interest at year 7. The joint venture’s obligations to complete those purchases will be subject to the venture’s leverage ratio not exceeding 2.75X EBITDA and the venture continuing to hold investment-grade ratings. Comcast also has certain rights to purchase GE’s interest in the venture at specified times. All such transactions would be done at a 20% premium to public market value with 50% sharing of upside above the closing valuation.
·         To the extent the joint venture is not required to meet GE’s redemption requests, Comcast will provide a backstop up to a maximum of $2.875 billion for the first redemption and a total backstop of $5.750 billion.

The transaction has been approved by the Board of Directors of GE and Comcast. It is subject to receipt of various regulatory approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and approvals of the Federal Communications Commission and certain international agencies. The transaction is also subject to other customary closing conditions. NBCU has obtained $9.85 billion of committed financing through a consortium of banks led by J.P. Morgan, Goldman Sachs, Morgan Stanley, BofA Merrill Lynch and Citi. This financing is expected to receive solid investment-grade ratings from S&P and Moody’s.
Comcast and GE intend to submit regulatory applications supporting the pro-competitive and strong public interest benefits of the transaction, including how the joint venture will better meet the entertainment, communications and information needs of the American public.

“We are prepared to make affirmative commitments to ensure that the pro-consumer and public interest benefits of the transaction are realized,” Roberts said. “Today, we have announced a number of initial commitments that expand on the capabilities that Comcast and NBCU have built over the years, and the new opportunities that this combination makes possible. These commitments address the needs of various audiences and stakeholders, and we will provide additional details on these and other commitments in our public interest filing with the Federal Communications Commission.”

Morgan Stanley is lead financial advisor to Comcast with UBS and BofA Merrill Lynch acting as co-advisors. Davis Polk & Wardwell LLP is Comcast’s legal advisor. J.P. Morgan is lead financial advisor to GE with Goldman Sachs and Citi acting as co-advisors. Weil, Gotshal & Manges LLP is GE’s and NBCU’s legal advisor.
Teleconference and Webcast
Comcast will host a conference call with the financial community today, December 3, 2009, at 8:30 a.m. Eastern Time (ET) to discuss this morning’s announcement with Comcast Chairman and CEO Brian L. Roberts, Comcast Chief Operating Officer Stephen B. Burke and Comcast Chief Financial Officer, Michael J. Angelakis. The conference call will be broadcast live via the Company’s Investor Relations website at or Those parties interested in participating via telephone should dial (800) 263- 8495 with the conference ID number 44380493. A telephone replay of the call will be available on the Investor Relations website starting at 12:30 p.m. Eastern Time on December 3, 2009 and will be available until December 8, 2009 at midnight Eastern Time. To access the rebroadcast, please dial (800) 642-1687 conference ID 44380493.
GE will also host a webcast with the financial community today, December 3, 2009, at 8:30 a.m. Eastern Time / 7:30 a.m. Central Time to discuss this morning’s announcement with GE Chairman and CEO Jeff Immelt, GE Chief Financial Officer Keith Sherin and NBCU President and CEO Jeff Zucker. The webcast will be available at A replay will be available later in the day on the site.
Additional media materials are available at, and

The description of this transaction included in this press release is qualified in its entirety by, and is subject to, the terms of the definitive documentation for the transaction to be filed by Comcast with the Securities and Exchange Commission on a Current Report on Form 8-K.

About GE
GE (NYSE: GE) is a diversified infrastructure, finance and media company taking on the world’s toughest challenges. From aircraft engines and power generation to financial services, medical imaging, and television programming, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company’s Web site at
About Comcast Corporation
Comcast Corporation (Nasdaq: CMCSA, CMCSK) ( is one of the nation’s leading providers of entertainment, information and communication products and services. With 23.8 million cable customers, 15.7 million high-speed Internet customers, and 7.4 million Comcast Digital Voice customers, Comcast is principally involved in the development, management and operation of cable systems and in the delivery of programming content.

Comcast’s content networks and investments include E! Entertainment Television, Style Network, Golf Channel, VERSUS, G4, PBS KIDS Sprout, TV One, ten sports networks operated by Comcast Sports Group and Comcast Interactive Media, which develops and operates Comcast’s Internet businesses, including ( Comcast also has a majority ownership in Comcast-Spectacor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia.
About NBC Universal:
NBC Universal is one of the world’s leading media and entertainment companies in the development, production, and marketing of entertainment, news, and information to a global audience. NBC Universal owns and operates a valuable portfolio of news and entertainment networks, a premier motion picture company, significant television production operations, a leading television stations group, and world-renowned theme parks. NBC Universal is 80% owned by General Electric and 20% owned by Vivendi.
Combined Assets/Properties
The assets and properties owned or controlled by the new joint venture will include some of the best known brands in the entertainment industry, including:
• Several of television’s most successful cable networks, including USA, Bravo, CNBC, MSNBC, Syfy, E!, Style, Versus and the Golf Channel;
• One of the nation’s largest television groups, including:
o The NBC Television Network;
o Local broadcast TV stations in ten top U.S. markets including New York, Los Angeles, Chicago and Philadelphia;
o The national Telemundo Network and 16 Telemundo O&O stations in locations such as Los Angeles, New York, Miami, Houston, Chicago and Dallas/Ft.Worth;
• Preeminent television production operations that produce Emmy Award winning programs like The Office, 30 Rock, Law & Order, Heroes, Saturday Night Live and The Tonight Show, as well as syndicate operations through NBC Universal Domestic and International Distribution and a 3,000-title library of television episodes;
• NBC News, the leading source of global news and information in the United States with top-rated programs such as Nightly News with Brian Williams, Today and Meet the Press;
• A robust sports programming lineup featuring the Olympics (through 2012), NBC Sunday Night Football, NHL/Stanley Cup, PGA Tour, US Open, Ryder Cup, Wimbledon and the Kentucky Derby, Versus, Golf Channel and Comcast’s 10 regional sports networks;
• Universal Pictures, which has produced Academy Award winners Atonement, The Bourne Ultimatum, Brokeback Mountain, Ray and A Beautiful Mind, Focus Features, which recently produced Away We Go, and an extensive movie library with more than 4,000 titles through Universal Studios Home Entertainment;
• Fast growing digital media properties including, iVillage,, Fandango, and Daily Candy, which together generate more than 40 million unique users each month;
• Ownership of theme parks in Florida (50% interest), California (100% interest) and a financial interest in a theme park in Japan;
• A minority interest in A&E, Biography, The History Channel, The Weather Channel, Lifetime and

Do Salahis’ Emails Exonerate the White House Party Crashers?

salahiThe saga of would-be reality stars and accused White House Party Crashers Michaele and Tareq Salahi continues to unroll slowly, as NBC fortuitously scores scoop after scoop. The latest: The Salahis’ attorney provided The Today Show with copies of their emails with Defense Department White House Liaison Michele Jones. If this is the bombshell evidence they promised to bring Matt Lauer in their meager Today interview Monday, they’re in trouble. These emails are all smoke, no  gun.

Given the very best possible interpretation, the emails show that Michelle Jones was working to get the Salahis tickets to the arrival ceremony prior to the dinner, but explicitly tells them that the dinner has been full up for months. The emails leave open the possibility, however unlikely, that the Salahis might attend the arrival if tickets became available.

That leaves open the possibility that the couple passed through the first checkpoint as legitimate attendees of the arrival ceremony. I asked the White House about the arrival ceremony specifically, and a White House official told me that “the Salahi’s were not cleared to enter the White House grounds for any reason.”

Michele Jones never confirms either event for the couple in the emails, except to accept their thanks the following day.

The crux of their defense, then, is that they went to the White House just to check if Jones had managed an 11th-hour miracle, and they say in a thank-you email that they were, indeed, on the list. The email conveniently explains that their cellphone battery had died, so they wouldn’t have received any calls telling them not to go.

The White House and the Secret Service have now fairly definitively ruled out every scenario that could vindicate the Salahis. While their future as reality TV stars may be bright, it looks like they could face serious trouble for what looks more and more like a ridiculous security breach.