Home Entertainment GE to sell NBC stake for $16.7B

GE to sell NBC stake for $16.7B

Three years after announcing plans to reduce its stake in NBCUniversal in a deal with Comcast Corp., General Electric Co. has agreed to sell its remaining 49 percent stake to the cable provider for $16.7 billion.

GE Capital, a unit of the Fairfield-based GE, will sell the NBCUniversal (NBCU) occupied floors of 30 Rockefeller Center and the Englewood, N.J., headquarters of CNBC to Comcast for an additional $1.4 billion, bringing the total value of the deal to $18.1 billion.

The deal, which was foreshadowed last September in a series of comments by Comcast CFO Michael Angelakis, has been approved by the boards of directors of GE and Comcast and is expected to be completed before the end of the first quarter pending regulatory approvals.

Divesting of its common equity interest in the joint NBCU venture with Comcast will allow GE to increase cash dividends, accelerate share buyback plans and invest in its core businesses, said Jeffrey Immelt, chairman and CEO of GE.

“This transaction allows us to significantly increase the cash we plan to return to shareholders in 2013, to approximately $18 billion, and to continue to invest in our industrial business,” Immelt said in a Feb. 12 statement.

The joint venture includes NBCU’s cable networks, films, television shows, theme parks and unconsolidated investments, and Comcast’s cable networks, which include E!, Versus and the Golf Channel and 10 regional sports networks, among other components.

In December 2009, GE agreed to sell a portion of its interest in NBCU to Comcast, making Comcast — the country’s largest cable provider — the majority partner in the NBCU joint venture.

That $13.8 billion deal was approved and finalized in January 2011, with GE’s share in NBCU reduced from 80 percent to 49 percent and Comcast’s share increasing to 51 percent of the joint venture. As part of that agreement, Comcast had the option of buying out GE in a three-and-a-half to seven-year time frame.

Comcast CEO and Chairman Brian L. Roberts recognized the GE management team for being a “valuable” partner over the past two years.

“Our decision to acquire GE’s ownership is driven by our sense of optimism for the future prospects of NBCUniversal and our desire to capture future value that we hope to create for our shareholders,” Roberts said in a statement.

In October 2011, NBC Sports Group, a unit of NBCU, became the fourth company to enlist in Connecticut’s First Five economic development initiative and said it would consolidate the bulk of its Northeast operations at new studios and corporate offices in Stamford.

At the time of the announcement, NBC Sports Group Chairman Mark Lazarus said, “This new campus is about bringing people together to maximize production, creativity and efficient teamwork. We are creating one 32-acre unique location that allows us to build numerous state-of-the-art studios, house more than 450 employees and prepare for anticipated future growth.”

In exchange for pledging to create as many as 450 new jobs in Connecticut and to make various capital investments in the new facilities, the state Department of Economic and Community Development provided NBC Sports Group a $20 million loan and other incentives.

With the Feb. 12 transaction, GE will receive $12 billion in cash, $4 billion in debt guaranteed by Comcast and $700 million of preferred stock, while GE Capital will receive $1.4 billion in cash.

GE estimated that its pre-tax gain from the sale of its NBCU interest would be about $1 billion, with that gain offset by restructuring that will take place in 2013.

The company’s board of directors also increased GE’s share repurchase authority to $35 billion, with about $23 billion of authorization remaining as of Feb. 12. With the authorization, GE plans to increase its share repurchase program to about $10 billion this year.

Earnings previously forecast from GE’s NBCU stake would likely be replaced by the effects of share repurchases, cost reductions and earnings growth in the company’s industrial businesses, GE said.

GE Capital expects a $500 million after-tax gain from the sale of the properties, with those funds allocated to accelerating non-core asset reductions.

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