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Wall Street: Comcast got a steal on NBCUniversal

Published on NewsOK Modified: February 13, 2013 at 4:28 pm •  Published: February 13, 2013

Shares of Philadelphia-based Comcast rose $1.16, or 3 percent, to close Wednesday at $40.13. In opening trading, it hit $42, matching an all-time high set in March 1999.

Shares of General Electric Co., which is based in Fairfield, Conn., rose 81 cents or 3.6 percent, to $23.39. The day's high of $23.48 was the highest level for the stock since 2008.

For GE, the deal accelerates a transition to a more purely industrial company, which investors have been wanting to see for a long time.

But the company does not need the cash. Long before this deal was announced, investors were wondering what GE was going to do with cash coming in from the company's operations. Now there's an extra $17 billion.

GE will buy back stock and issue dividends, but GE has a long history of acquiring companies at a voracious rate. "What do they want to buy?" asks Holland, the analyst. "That's the key question now."

On the Comcast side, CEO Brian Roberts told The Associated Press after the deal was announced Tuesday that the company decided it made sense to buy GE's stake now because the improved performance of the NBC broadcast network and cable-TV programming made it more likely the price would rise in the future.

Thomas Seitz, analyst at Jefferies & Co., said Comcast was getting an "attractive" value for NBCUniversal, saying the price was just a small premium to the valuation and earnings of other big media companies such as Disney and Time Warner Inc.

Complete ownership will let Comcast benefit more from the rising price of sports rights and other TV programs. It avoids solely being in the uncomfortable position of passing those costs onto customers. And long-term rights deals between the TV networks and their cable and satellite distributors have ensured the importance of TV, even as Web video is on the rise.

Besides buying the rest of NBCUniversal, Comcast agreed to pay GE another $1.4 billion for other assets that include one of New York's best-known landmarks, NBC's headquarters at 30 Rockefeller Plaza.


AP Business Writer Jon Fahey contributed to this report.