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Thursday, December 3, 2009
 Comcast and GE to Create Leading Entertainment Company
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Message Text: Comcast announced Thursday it plans to buy a majority stake in NBC Universal for $13.75 billion, giving the U.S.' largest cable TV operator control of the Peacock network, an array of cable channels and a major movie studio.

Comcast and General Electric announced today that they have signed a definitive agreement to form a joint venture that will be 51 percent owned by Comcast, 49 percent owned by GE and managed by Comcast.

The joint venture will consist of the NBC Universal (NBCU) businesses and Comcast?s cable networks, regional sports networks and certain digital properties and certain unconsolidated investments, the company said.

The combination of assets creates a leading media and entertainment company with the capability to provide some of the world?s most popular entertainment, news and sports content, movies and film libraries to consumers anytime, anywhere. The joint venture will be anchored by an portfolio of cable networks and regional sports networks that will account for about 80 percent of its cash flow, including USA, Bravo, Syfy, E!, Versus, CNBC and MSNBC.

Under the terms of the transaction, GE will contribute to the joint venture NBCU?s businesses valued at $30 billion, including its cable networks, filmed entertainment, televised entertainment, theme parks, and unconsolidated investments, subject to $9.1 billion in debt to third party lenders. Comcast will contribute its cable networks including E!, Versus and the Golf Channel, its ten regional sports networks, and certain digital media properties, collectively valued at $7.25 billion, and make a payment to GE of approximately $6.5 billion of cash subject to certain adjustments based on various events between signing and closing.

Comcast Chairman and Chief Executive Officer Brian Roberts said, "This deal is a perfect fit for Comcast and will allow us to become a leader in the development and distribution of multiplatform 'anytime, anywhere media that American consumers are demanding. In particular, NBCU?s fast-growing, highly profitable cable networks are a great complement to our industry-leading distribution business. Today?s announced transaction will increase our capabilities in content and cable networks. At the same time, it will enhance consumer choice and accelerate the development of new digital products and services. GE has provided NBCU with a great home and has dramatically and positively transformed the business. We are honored that under this agreement Comcast would take over the stewardship of this important collection of assets and are absolutely committed to investing in NBCU and ensuring that it is a vibrant, financially strong company able to thrive in a rapidly evolving marketplace by delivering innovative programming. We are particularly pleased to be creating this new joint venture with GE and Jeff Immelt and to have their continued involvement.

"For Comcast, this transaction is strategically compelling and will generate attractive financial returns and build shareholder value," continued Roberts. "It is also expected to be immediately accretive and will also allow us to maintain our strong commitment to returning capital to shareholders?all while increasing the scale, capabilities and value of our cable distribution, content and digital assets. Significantly, it is entirely consistent with our intense focus on value creation and our disciplined strategy of pursuing profitable growth in areas complementary to our distribution business."

GE Chairman and CEO Jeff Immelt said, "The combination of Comcast?s cable and regional sports networks and digital media properties and NBCU will deliver strong returns for GE shareholders and business partners. NBCU has been a great business for GE over the past two decades. We have generated an average annual return of 11 percent, while expanding into cable, movies, parks and international media. We are reducing our ownership stake from 80 percent to 49 percent of a more valuable entity. By doing so, GE gets a good value for NBCU. This transaction will generate approximately $8 billion of cash at closing with an expected small after-tax gain. We have many opportunities to invest in our high-technology infrastructure businesses at attractive returns. I believe that the new NBCU will deliver value for both Comcast and GE in the future. We will give consumers and advertisers more choice and our cable and digital assets will be second to none. I am confident Brian Roberts and his team at Comcast will be great partners."

Comcast also announced the creation of Comcast Entertainment Group (CEG), which will house Comcast?s interest in the joint venture and will stand alongside Comcast Cable, which operates the company?s traditional cable business.

Headquarters for the business will remain in New York. The joint venture board will have three directors nominated by Comcast and two nominated by GE.

Key Elements Of The Transaction:

* NBCU will borrow approximately $9.1 billion from third-party lenders and distribute the cash to GE.
* NBCU, valued at $30 billion, will be contributed to the newly formed joint venture. Comcast will contribute its programming businesses and certain other properties valued at $7.25 billion.
* GE will acquire Vivendi's 20% interest in NBCU for $5.8 billion. GE will purchase approximately 38% of Vivendi?s interest (or approximately 7.66% of all outstanding NBCU shares) from Vivendi for $2 billion in September 2010, if the Comcast transaction is not closed by then. GE will acquire the remaining 62% of Vivendi?s interest (or approximately 12.34% of all outstanding NBCU shares) for $3.8 billion when the transaction closes.
* Comcast will make a payment to GE of approximately $6.5 billion in cash subject to certain adjustments based on various events between signing and closing.
* The new venture will be 51% owned by Comcast and 49% owned by GE.
* GE expects to realize $9.8 billion pre-tax in cash before debt reduction and transaction fees and after buyout of the Vivendi stake. GE expects to realize approximately $8 billion in cash after paying down the existing NBCU debt and transaction fees.
* GE will be entitled to elect to cause the joint venture to redeem one-half of its interest at year 3 ½ and its remaining interest at year 7. The joint venture?s obligations to complete those purchases will be subject to the venture?s leverage ratio not exceeding 2.75X EBITDA and the venture continuing to hold investment-grade ratings. Comcast also has certain rights to purchase GE?s interest in the venture at specified times. All such transactions would be done at a 20% premium to public market value with 50% sharing of upside above the closing valuation.
* To the extent the joint venture is not required to meet GE?s redemption requests, Comcast will provide a backstop up to a maximum of $2.875 billion for the first redemption and a total backstop of $5.750 billion.

The transaction has been approved by the Board of Directors of GE and Comcast. It is subject to receipt of various regulatory approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and approvals of the Federal Communications Commission and certain international agencies. The transaction is also subject to other customary closing conditions. NBCU has obtained $9.85 billion of committed financing through a consortium of banks led by J.P. Morgan, Goldman Sachs, Morgan Stanley, BofA Merrill Lynch and Citi. This financing is expected to receive solid investment-grade ratings from S&P and Moody?s.

BofA Merrill Lynch acting as co-advisors. Davis Polk & Wardwell LLP is Comcast?s legal advisor. J.P. Morgan is lead financial advisor to GE with Goldman Sachs and Citi acting as co-advisors. Weil, Gotshal & Manges LLP is GE?s and NBCU?s legal advisor.
 
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