NBCUniversal is hoarding its cash ahead of a July 2014 deadline when Peacock parent Comcast needs to shell out for half of General Electric’s remaining stake in NBCU.
“The plan we have in place is to make sure that NBCUniversal will generate the free cash flow and capacity so when that happens (it) will have the ability to redeem those shares or buy back those shares internally,” Comcast chief financial officer and vice chairman Michael Angelakis told investors at a media conference Thursday.
All Comcast’s billions of dollars in stock buybacks and dividend payouts, therefore, have been channeled through cable operations.
Comcast formally acquired its 51% controlling stake in NBCU in January 2011. The agreement gave seller General Electric the right to force a purchase of half of its 49% stake in 2014, and the rest seven years later, as Angelakis reminded investors at the Citi Entertainment conference. “So far so good. If I had a piece of wood to knock on I’d knock on it,” he said.
The structure of that deal means that the cable giant has a lot riding on the performance of NBCU. Angelakis continues to call the Peacock’s cablers the “crown jewels” and the reason they bought the business. The NBC broadcast network is the asset with the most potential.
“It’s been in fourth place for a really long time,” he said. “We need to move it forward to a higher level. If we do, there will be a real swing in profitability.”
Angelakis was bullish on the theme park business, noting that it is powering ahead. NBCU last year acquired full control of Universal Studios Orlando operation from its private equity partner, Blackstone Group.
But at the Universal studio, he acknowledged, there’s a big gap from “where we were several years ago” to present. “I don’t know if we can get back to that level, especially with the DVD market (softer) but we know we can do better than where we are today,” he said.
Angelakis was upbeat on a sweeping, ten-year cable carriage deal with Disney that was unveiled Wednesday. The long span of the pact will give Comcast some consistency on pricing going forward. And the range of programming and outlets it covers will allow the cabler to adapt and compete in a fast-changing environment.
“How can we utilize the Disney suite of services over many platforms — in the home, outside the home, linear on demand. And it’s really I think where we are going,” he said.