Scenarios swirl around NBC U

Comcast discussing possible 51% stake

Change is probably coming to NBC Universal. But how and when it does is still anyone’s guess because there are so many moving parts.

Amid the flurry of rumors about the Peacock’s future, one possible scenario that’s emerged has cable giant Comcast buying a 51% controlling stake in NBC Universal, with General Electric retaining 49%. There have been preliminary discussions along these lines between Comcast, NBC U and GE execs on a deal that would call for Comcast to pony up about $5 billion-$6 billion in cash plus its cable channels, which include E! Entertainment Television, Style, G4 and a handful of regional sports cablers.

But this scenario assumes that Vivendi intends to sell its 20% stake in NBC U. Vivendi’s pending decision on its stake has spurred all the activity around NBC U as a potential acquisition target for cash-rich media congloms like Comcast, or even a contender like AT&T. (Despite persistent rumors, Time Warner insiders insist they’ve had no discussions with GE.)

Ever since GE bought Universal from Vivendi in 2004, the French telecom conglom has had an annual option, which comes due in November, that allows it to renew its holding or force GE to buy it out. Or Vivendi could put its 20% on the public auction block in an IPO.

Given the current biz landscape, where media M&A activity is slowly but surely regaining steam (thank you, Disney and Marvel) and NBC U is seen as available for a bargain price, the approach of Vivendi’s annual option date has Wall Street in a tizzy about what may — or may not — transpire between Vivendi and GE.

A Vivendi spokeswoman said Thursday that the company would not comment on anything involving NBC Universal, and she reiterated that the company will not inform GE of its plans regarding the option until Nov. 15. Reps for NBC U and Comcast also declined comment Thursday.

Insiders close to the situation cautioned that GE is having numerous conversations involving a range of scenarios for NBC U, from bringing in some private equity investors to some kind of partnership with another media company.

NBC U’s attractiveness to Comcast is obvious thanks to its strong portfolio of cable channels including USA Network, Syfy, Bravo, Oxygen, MSNBC, CNBC and the Weather Channel.

The chatter about a possible Comcast-NBC U union led to speculation that the combined company could seek to sell off NBC’s 10 O&O stations and turn to cable distribution in those top markets for the Peacock’s mothership broadcast net. There were also instant worries that a Comcast-controlled Universal would be much more tight-fisted on spending on theatrical production.

Comcast has made no secret of its interest in getting deeper into showbiz. The Philadelphia-based company mounted an unsolicited — and ultimately unsuccessful — $66 billion takeover bid for Disney in early 2004, and it teamed with Sony Pictures and several private equity shingles in a $5 billion buyout of MGM in 2005. (Comcast continues to hold a 20% stake in the debt-plagued Lion.)

A union of Comcast and NBC U would undoubtedly face numerous regulatory hurdles — starting with antitrust concerns about one company controlling too many media assets in large markets. Comcast is the nation’s largest cable operator with nearly 24 million subscribers in 39 states.

The family-controlled company is headed by chairman-CEO Brian Roberts, the son of Comcast founder Ralph Roberts, a cable biz pioneer who recognized subscription TV’s potential in the 1960s. Comcast has long had a reputation as the most technologically advanced and well-managed major cable operator. Stephen Burke, Comcast’s chief operating officer and top lieutenant to Brian Roberts, headed ABC and worked for Disney before joining Comcast in 1998.

Investors appeared to be unsure what to make of all the deal chatter on a down day overall for the major indexes. Comcast shares were down $1.21, or 7%, at the close of trading Thursday to $15.67, but they inched up in after-hours trading. GE shares dropped 45¢, or 2.7%, to $15.97 and were flat in the after-hours market.

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