After months of courting, cable giant Comcast and NBC Universal have tied the knot.
They agreed to forge a joint venture that will give Comcast, the No. 1 cable operator, control of programming giant NBC Universal, creating the largest entertainment company in the United States.
The deal, which values NBC Universal at $30 billion, will make Comcast (CMCSA) a major power in television and movie production, theme parks, and the Internet. NBC Universal’s channels include the NBC TV network, Telemundo, USA Network, Bravo, CNBC, MSNBC, and Oxygen. The company also is a founder of Hulu, the No. 2 site for Web videos after Google’s YouTube.
Each evening, about 20% of all TV viewers tune in to channels that would be in the joint venture. The combination “will enhance consumer choice and accelerate the development of new digital products and services,” Comcast CEO Brian Roberts said.
In addition to revealing the financial terms, the companies — which will face strong opposition from consumer groups — on Thursday made several broad commitments to serve the public interest.
Comcast said it “remains committed to continuing” free over-the-air television. That includes support for local news and children’s programming. The cable company also said it will add two independently owned channels each year for the next three years to its package of digital television services.
The plan calls for GE (GE) to contribute NBC Universal to a new company. Comcast will pay GE $6.5 billion and put channels it owns — including E! Entertainment Television, Versus, and The Golf Channel — into the venture in return for a 51% stake. The Comcast channels are valued at $7.25 billion.
GE also will collect $9.1 billion from NBC Universal, which will borrow the cash from third party lenders. GE has also agreed to pay $5.8 billion to Vivendi for its 20% stake in NBC Universal.
The industrial behemoth will have 49% of the joint venture. It can sell half of that to Comcast after three and a half years, and sell the rest after seven years.
Whether or not this new deal will mean that the cable giant will begin charging a per-viewing-fee for shows on Hulu remains to be seen.
However, this step is a major one and could have a definite impact on the future of the business side of content delivery.
My big concern is that now one of the “big four” networks will have much greater control over the delivery method. In many cases, if you want cable TV, there’s only one game in town. If that game is Comcast, it’s almost like they’re getting paid twice for the same content -once for the advertising dollars the show generates, and once for the fees generated by delivering the shows to viewers.
And what’s to stop Comcast from trying to more heavily feature NBCU networks? Sure, Sci-Fi and Bravo are part of the basic package, but Discovery, FX, and Comedy Central are in a premium package. It seems more than a bit unfair to the consumer.
’cause a major cable distributor owning a group of broadcast and cable channels is IN NO WAY a conflict of interest…Um… what?
The Sci-Fi Channel isn’t part of the basic package where I live. It’s one of the triple-digit channels.