Comcast Corp., the largest U.S. cable company, will buy out General Electric Co.’s ownership of NBC Universal for $16.7 billion, following through on the cable company’s purchase of a controlling stake two years ago.
That gives it full control of one of the industry’s largest and most profitable stable of cable networks, as well as the NBC broadcast network with its recognizable peacock logo.
Two years ago Comcast bought an initial 51% stake in NBCU, transforming the nation’s biggest cable operator into a diversified media company.
Now, Comcast is doubling down, despite the uncertainty facing the industry, given the rise of digital outlets like Netflix Inc. (NFLX +3.03%) and Amazon.com Inc. (AMZN +3.17%), says the Wall Street Journal.
Comcast shares jumped more than 8 percent in after-hours trading, while GE shares were up more than 3 percent.
In addition to the main deal, which pushed up Comcast shares about 7 percent in after hours trading, Comcast will also gain full control of the floors NBC uses at 30 Rockefeller Plaza in New York City and CNBC’s headquarters in Englewood Cliffs, New Jersey, for about $1.4 billion, reports the Reuters.
Combining properties such as USA Network, Universal Studios and more than 22 million cable subscribers, the deal completes a 50-year transformation for Comcast, which was founded by Chief Executive Officer Brian Roberts’ father, Ralph, in 1963.
The deal, which is expected to close at the end of the first quarter, will be funded with $11.4 billion of cash on hand, $4 billion of subsidiary senior unsecured notes to be issued to GE, $2 billion of borrowings under Comcast and/or bank credit facilities, and $725 million of subsidiary preferred stock to be issued to GE.
“The reality is content has gotten stronger and stronger and safer and safer, so Comcast should be trading at a premium to the cable operators. They are an integrated media and entertainment company. They are not just a cable operator,” said John Tinker, an analyst at Maxim Group.
According to the Bloomberg, Comcast also released its fourth-quarter results today. Net income rose 18 percent to $1.52 billion, or 56 cents a share, from $1.29 billion, or 47 cents, a year earlier. Sales climbed almost 6 percent to $15.9 billion.
The company lost about 7,000 video subscribers in the period and added 341,000 high-speed Internet customers and 168,000 voice customers.
Comcast also raised its dividend 20 percent to 78 cents a share annually and the cable operator announced it plans to repurchase $2 billion of its stock in 2013.
Comcast Chief Financial Officer Michael Angelakis had said in September that the company was considering purchasing the remainder of NBC. The network has relied on hit shows such as “Sunday Night Football,” “The Voice” and “Revolution” to boost ratings over the past year, following years of last-place showings.
GE board members believe the deal “was a good price,” and formally approved selling the rest of its NBCUniversal stake last week, said one person close to the situation. The idea of an accelerated sale of the holding “has been percolating for a while,” and GE directors began discussing it “some time back,” this person said, while declining to be more specific.
GE accepted Comcast’s offer because “GE has some things it would like to do” with the money, this person added. “A candy bar today is better than a candy bar tomorrow.”