Comcast in Talks for NBC/Universal (Market Update)

Published Oct. 2, 2009 at 4:00 a.m.

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GE in Talks to Sell 51% of NBC

GOOD MORNING. Stocks in Asia fell today; U.S. futures are pointing to a lower open.

The TV show 30 Rock may soon have a new name: Comcast Rock. General Electric (GE) is in talks to sell a 51% stake in NBC Universal to U.S. cable operator Comcast (CMCSA), according to anonymous sources in news reports. And if Comcast doesn’t buy the unit, it may be floated in an IPO. GE CEO Jeffrey Immelt told reporters in India today that “discussions are ongoing” about an IPO “or other partnership” for NBC Universal. And analysts say it’s probably only a matter of time before a deal emerges for the unit, which has been a problem child for GE for years.

GE has owned NBC since 1986 and profited off some glory years. But it’s been nearly a decade since NBC was the place to go for “must-see” TV shows like ER, Seinfeld and Friends (though 30 Rock has been a hit). The network hasn’t had a breakout lineup of shows in years, has struggled with its ratings and has been an odd fit for GE, which has tried various measures to boost NBC’s fortunes—from shuffling executives to, most recently, moving Jay Leno’s talk show to prime-time. Profits at NBC Universal were flat from 2005 through 2008 and declined 43% to $930 million in the first six months of this year. And the Universal movie unit has had a mixed box-office record lately, with hits like Mamma Mia offset by flops such as Land of the Lost.

NBC Universal’s corporate structure has also complicated matters. The French conglomerate Vivendi (VIVDY) owns a 20% stake in the unit and has a window in November when it can sell its position. Analysts in Europe say Vivendi is eager to quit the business; the euro has soared against the dollar, depreciating the unit’s value to Vivendi, and as a non-core stake it’s no longer “beneficial” to the French firm, says an analyst in London who requested anonymity because the deal talks were so fluid...For its part, Comcast has been keen on expanding its media empire with NBC’s assets and a deal would make it one of the most dominant media powerhouses in the country. Analysts say Comcast wants to put a small amount of cash up-front, however, which could make a deal hard to strike.

IN OTHER NEWS:

Government figures on unemployment are due out this morning and economists expect the jobless rate hit a 26-year high in September, rising to 9.8% from 9.7% in August. LINK
U.S. auto sales plunged 23% in September as showrooms emptied after the "cash for clunkers" program wound down. General Motors (GM) and Chrysler were hit hardest, with sales down 45% and 42% respectively. LINK
Troubled commercial lender CIT (CIT) said late yesterday that it will try to restructure its debt and added it may file for bankruptcy protection if its debt exchange plan is unsuccessful. LINK

Barack and Michelle: Going for the Gold

Chicago may be about to find out just how much Olympic gold is worth...After in-person pitches from Barack and Michelle Obama, the International Olympic Committee will announce its choice for the host city of the 2016 Summer Games at 12:30 p.m., EST...Chicago’s up against Tokyo, Madrid, and Rio de Janeiro.

If chosen, Chicago would be the seventh American city to host the Olympics since the 1904 Summer Games in St. Louis (although Lake Placid, New York and Los Angeles, Calif. have each hosted twice)...Salt Lake City’s 2002 Winter Games resulted in $1.5 billion in earnings over seven years for Utah workers, and some Utah businesses went on to win contracts for work on the Athens and Torino Games, according to the city’s Chamber of Commerce.

The Chicago 2016 bid committee has proposed to situate the Olympic Village in the city’s South Side, to be converted after the games into residential housing...The plan calls for 81% of Olympic venues to be existing or temporary structures, with five new structures and 11 temporary facilities slated to be built...The committee’s bid materials say the Games can be accommodated by the city’s existing hotels, transportation system, and other infrastructure.

Some of the benefits of hosting the Games may be less quantifiable than dollars spent or housing units built...“People here are still incredibly proud that we hosted the Olympics,” says Marty Carpenter, the director of communications for the Salt Lake City Chamber of Commerce...“I don’t think you could find too many people in the state who would say it was a bad idea.”

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