Issue of the week: What does Comcast see in NBC?

Last year, General Electric CEO Jeff Immelt said he had no plans to sell NBC Universal, the conglomerate’s media and entertainment unit, said Cynthia Littleton in Variety.com. Apparently, he’s changed his mind. GE is now negotiating to sell a majority stake in NBC Universal to Comcast, the largest U.S. cable operator. Comcast Chairman Brian Roberts, who in 2004 mounted an unsuccessful $54 billion bid for Disney, “has made no secret of his interest in getting deeper into showbiz.” By acquiring control of NBC Universal, Comcast would get Universal Pictures, the NBC broadcast network, 10 local TV stations, hit programming franchises like Law & Order, and a “strong portfolio of cable channels,” including MSNBC, USA, and the Weather Channel. GE, for its part, would limit its exposure to a business that’s been struggling of late and that has never meshed well with the conglomerate’s core industrial holdings.

To gain its prize, however, Comcast would have to pull off a complex “chain of deals and agreements,” said Evan Hessel in Forbes.com. The first step is to convince Vivendi, the French media conglomerate that owns 20 percent of NBC Universal, to sell its stake. Then Comcast and GE would form a new company consisting of NBC Universal’s assets and the cable channels that Comcast already owns, including E! and Versus. Comcast would pay GE a “hefty” $6 billion or so for 51 percent of the new company. The arrangement would need the blessing of the Federal Communications Commission, which “may be inclined to fight” a deal that would concentrate so many valuable properties under a single corporate umbrella. And finally, GE and Comcast would “have to convince their shareholders of the value of connecting a content company with an entertainment distributor, an idea that has fallen out of favor in recent years.”

There’s a reason the approach is out of favor, said Andrew Leonard in Salon.com. Why combine good content with a distribution system that’s rapidly becoming obsolete? For a growing segment of the population, “the computer is the primary window on the entertainment universe.” In my own household, for instance, we no longer have cable or even a TV, and nobody, including my kids, feels deprived. “They’ve got more

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

content options on the Net now than they know what to do with.” No matter how many channels Comcast buys, it can’t slow “the steady flow of eyeballs to online video.”

Actually, buying NBC Universal is Comcast’s way of confronting the digital threat, said Kelly Riddell and Sarah Rabil in Bloomberg.com. NBC, don’t forget, is a co-owner of Hulu.com, a website that streams TV shows and movies. Hulu.com might soon be eclipsed by other vehicles for delivering digital content, but the point is that NBC Universal is already preparing for a future without cable. Comcast’s Roberts wants to buy into that effort, to gain “a bigger voice in content distribution.” Beyond the business imperatives, it’s also a matter of family pride. His father started Comcast in 1963 as a five-channel cable system in Tupelo, Miss. Roberts is determined not to oversee its demise.