The US cable, TV and broadband sectors head into uncertain waters following the merger between Comcast and GE’s NBC Universal (NBCU).
In a complex deal that followed nine months of negotiation, Comcast, the biggest US cable operator, will take a 51% stake of NBCU and GE 49%. It was made possible by the exit of French telecom firm Vivendi from NBCU, selling its stake to GE for $5.8 billion.
The new venture faces a tough time winning regulatory approval, however. A key Congress leader has warned he will closely scrutinize the deal, which could take as long as 12 months.
The deal, which values NBCU at about $30 billion (€19.9b) gives Comcast control of the US's oldest television network.
Comcast will contribute cable channels, including the Golf Channel and E Entertainment, which are worth about $7.25 billion, and will pay GE around $6.5 billion in cash, for a total of $13.75 billion.
Most of NBCU’s revenue comes from the popular cable channels such as USA, Bravo, SyFy, CNBC and MSNBC. The NBC network and Universal Studios will comprise a small portion of the joint venture’s cash flow, the New York Times reported.
If granted approval the merged business would have revenue of $51 billion.
However, the combination of a broadband network and TV content directly impacts on “network neutrality” and is almost certain to be opposed by internet firms such as Google and Yahoo.
Henry Waxman, chairman of the House Energy and Commerce Committee, said: “This proposal raises questions regarding diversity, competition, and the future of the production and distribution of video content across broadcasting, cable, online and mobile platforms.”
Rival broadband providers Verizon and AT&T may also oppose the deal, or seek content partners to merge with.
Comcast serves 23.8 million US homes with its cable TV service and 15.7 million homes with broadband internet.
According to reports Vivendi won’t receive its payment until the Comcast-GE deal closes but GE will have to make a partial payment of up to $2 billion if the transaction and its various regulatory approvals stretch too far into 2010.
Jeff Zucker, current president and CEO of NBCU, and who will be CEO of the new joint venture, said the merger would “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.”