Will Comcast, NBC Universal Merger Pass Regulator Scrutiny?

General Electric’s $5.8 billion purchase of Vivendi’s minority stake in NBC bodes well for Comcast. The cable giant could buy a 51% stake in NBC as soon as Thursday. The Guardian has more:

This transaction will mean that GE owns 100% of NBC and it will allow the sprawling US industrial group to press ahead with an imminent plan to sell a majority of the business to Comcast – a buyout that could reshape a significant chunk of the media industry.

NBC’s businesses range from a coast-to-coast mainstream US television channel to Hollywood’s Universal Studios and specialist broadcasting offerings such as CNBC, Bravo and the Weather Channel. The company is valued at $29bn and Comcast could tie up a deal to snap up 51% as early as Thursday.

Analysts say that a sale makes sense to both GE and Vivendi which have seen NBC’s television ratings flounder. But critics are alarmed that Comcast, which is America’s biggest cable operator, will end up with too much sway over consumers. The media mogul John Malone, who chairs the Discovery Channel-to-QVC empire Liberty Media, recently remarked that Comcast would have “too much power” by controlling both content and delivery allowing it, potentially, to charge high prices to other cable operators who want to carry NBC.

The New York Times says that the GE originally bought into media as a hedge, at a time when Japanese manufacturers were an increasing threat. Now, GE is shedding its media unit to focus more strongly on its industrial businesses, while reducing debt incurred by its big finance branch. As far as Comcast, the Times has this to say:

…Comcast was the lone serious suitor (for Vivendi’s stake), a testament to the uncertain future of mainstream media, as the Internet has fractured audiences and few viable business models have emerged for the distribution of content online. Comcast…has long harbored big ambitions of becoming a major producer of television and movies. In 2004, Comcast failed in a hostile takeover bid for the Walt Disney Company.

In the proposed deal, Comcast will contribute its own cable channels, which include Versus, the Golf Channel and the E Entertainment channel, and a modest amount of cash, about $5 billion, to a joint venture in which it will own 51 percent. G.E. will retain a 49 percent stake, and would likely reduce its ownership over several years.

(Some analysts think that) the deal is a bet by Comcast on how it can grow its business. It could use its power in film, with Universal Studios, to expand video-on-demand offerings by altering movie release windows to make movies available on demand the same day they are released on DVD, noted Craig Moffett, an analyst at Sanford C. Bernstein.