Questions continue to swirl around Comcast venture

The blockbuster joint venture between Comcast Corp. and NBC Universal, still an uncertain proposition, was the target of speculation, analysis, and second-guessing yesterday, including from a veteran of another ambitious media merger:

Time Warner Inc. weighed in by saying it had no interest in bidding against Comcast for one of the nation's storied movie and TV studios.

Taking the measure of the deal was one analyst who warned of previous failed media megamergers and said Comcast stockholders should fear the deal.

Others said it was a bold gambit by Comcast chief executive Brian L. Roberts, who many believe is smartly hedging for the migration of movie- and TV-viewing to the Internet.

There was speculation on everything from the reception the proposed multibillion-dollar merger would get from the Obama administration, to a possible new name for a merged Comcast-NBC Universal.

Laura Martin, a former entertainment-industry executive and senior media analyst with Soleil Securities and based in Los Angeles, said the Comcast deal may be the best hope for the NBC broadcast TV network.

General Electric, which owns 80 percent of NBC Universal, is losing money on NBC programming. The network recently plugged a prime-time slot with comedian Jay Leno and GE could be forced to take other actions to save money, Martin said.

"GE is trying to navigate the tightrope of doing what is best for its shareholders and not shutting down one of the nation's big networks," she said.

The Philadelphia cable giant and industrial titan General Electric are in advanced talks to create a new company with the assets of NBC Universal and Comcast's cable-TV networks, including its regional sports networks, sources say. Word of the talks broke Wednesday night, with both Comcast and GE acknowledging Thursday that they were in negotiations.

An official announcement could be weeks away. Sources at both Comcast and GE say the talks could collapse over any number of issues.

The new company, a joint venture, would generate $18.5 billion a year in revenue through broadcast TV advertising, cable-TV fees, and big-screen movie distribution, according to financial details from the two companies. Comcast would own 51 percent of the venture and General Electric 49 percent.

Cash-poor General Electric seems willing to sell NBC Universal at a discounted price. GE likely would take $12 billion to $13 billion in cash in the deal by loading NBC Universal with debt, sources and other reports predicted. Martin said she believed the new company could service the heavy borrowings, but would not have an investment-grade rating on its debt.

Comcast could contribute $6 billion in cash and $6 billion in assets for a 51 percent stake in the new entertainment venture.

Comcast sources say the new entertainment company would generate the cash to pay down the debt and, eventually, buy out GE, giving Comcast full ownership.

The deal is contingent on French company Vivendi selling its 20 percent stake in NBC Universal, a decision it could make in November.

Richard Greenfield, of Pali Research in New York, said a deal for NBC Universal could divert Comcast's management attention from its core business of running cable systems and noted the past failures of media megamergers. He also said there would be a culture clash between the hit-driven NBC Universal and technology- and financial-focused Comcast.

"Comcast is trying to become a massive player in content - a move that investors should be frightened about," he wrote yesterday in an investment report.

Jessica Reif Cohen, research analyst with Bank of America, said she considered the growth rates for NBC Universal to be higher than Comcast's. "This acquisition would be an exceptionally positive and bold strategic move by Comcast," she wrote.

Comcast shares fell 7 percent Thursday when information of the deal was disclosed. The shares shed an additional 2.4 percent, 43 cents yesterday, to close at $15.24.

At a conference in Washington yesterday, Time Warner Inc. chief executive officer Jeffrey Bewkes said that he was not interested in bidding on NBC Universal because, he told Bloomberg News, few of the larger media mergers and acquisitions "have delivered what they said they would."

Time Warner, which is based in New York, has separated its entertainment arms, which includes HBO, and its cable-distribution business into different companies. Time Warner was the merger of the Time Inc. magazines, Warner Communications Inc., and America Online Inc.