Thursday, December 3, 2009
GE, Comcast Announce Joint Deal
This article describes what will be the new ownership of the media company NBC Universal. General Electric is purchasing the shares in the company previously held by Viviendi, and it will lead to the company being owned 51% by Comcast, and 49% by General Electric. The deal will make NBC Universal much more valuable after its completion, because they will be combining their cable networks with Comcast. Since NBC Universal has been on a downward spiral in the last few years after a profitable decade in the 1990s, they are hoping this may turn things around.
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GE's decision to sell their 51% stake in NBC Universal to Comcast Corp. is a smart strategic move because it enables them to focus their resources on the company's main businesses and engines of future growth. However, it does come at a cost because NBC Universal has provided an average return of 11%. It should be interesting to see how well GE performs from this sale.
With General Electrics decision to merge with Comcast Corp. it will be very interesting to see how everything pans out. I agree that this is a very smart investment for Comcast, which is the countries largest cable company, because now they will have more access to NBCU's fast-growing cable networks which will complement their distribution business. The only potential problem that could arise is that NBC Universal reported an 11% drop in revenue and a 27% profit decline in the first nine months of this year. Needless to say, it will be interesting to see how the new venture performs.
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