LOS ANGELES, Calif. – Comcast said Tuesday that it’s buying the rest of NBCUniversal from General Electric for $16.7 billion, doing so several years early as the company takes advantage of low borrowing costs and what CEO Brian Roberts called a “very attractive price.”
At the same time, Comcast Corp. raised its annual dividend 20 per cent to 78 cents per share and vowed to buy back $2 billion in shares this year. It is also buying NBCUniversal’s headquarters at 30 Rockefeller Plaza in New York and the CNBC headquarters in Englewood Cliffs, New Jersey, for another $1.4 billion.
Investors thought the move was good for both companies — GE because it got cash for its stake earlier than expected and Comcast because it is seen to be a good use of its cash.
Comcast shares jumped $3.09, or 7.9 per cent, to $42.06 in after-hours trading. GE shares rose 77 cents, or 3.4 per cent, to $23.35.
Comcast had bought a 51 per cent stake in the company that owns the NBC broadcast network, the movie studio Universal Pictures and pay TV networks such as USA, CNBC, Bravo and SyFy in January 2011. General Electric Co. had the remaining 49 per cent. Comcast had planned to take a larger stake in it over seven years, paying for it from operating cash.
But Roberts told The Associated Press that the sale of its stake in pay TV network A&E and some wireless spectrum gave it plenty of cash on hand. He also said Comcast got a good deal given that the stock price of media conglomerates has been rising.
“We thought that we would have to pay more later,” he said. “We really have known we wanted to buy 100 per cent from the beginning of the transaction. We wanted to learn the business … we feel that now is an opportune time.”
The deal, expected to close by the end of March, values NBCUniversal at around $34 billion, and it has about $5 billion in debt. When Comcast bought the 51 per cent stake in the company in January 2011, it was valued at around $30 billion.
The company said it would finance the deal with $11.4 billion of cash on hand, $4 billion in debt owed to GE, $2 billion from its own credit lines and $725 million in preferred stock issued to GE.
Comcast also posted its earnings results a day early, saying earnings rose 18 per cent to $1.52 billion, or 56 cents per share, in the quarter through December. Excluding a favourable income tax adjustment, adjusted earnings came to 52 cents per share, falling short of the 54 cents per share expected by analysts polled by FactSet. Revenue rose 6 per cent to $15.94 billion, also slightly below the $16.01 billion analysts were expecting.
Comcast had bought a 51 per cent stake in NBC Universal, home of the NBC television network, from General Electric Co. for $13.8 billion in cash and assets. It came after the government approved Comcast’s takeover of NBCUniversal with conditions intended to prevent it from keeping NBC programming to itself at the detriment of other cable operators and video websites.
Comcast, which is based in Philadelphia, is the nation’s largest cable TV operator with 22 million subscribers.
In the deal, Comcast paid General Electric just under $6.2 billion in cash and contributed its pay TV channels such as E! Entertainment Television and The Golf Channel, worth $7.25 billion, to NBC Universal.
GE’s stake in NBC Universal fell to 49 per cent from 80 per cent, but GE had planned to diminish that to zero by being paid out from the venture over about seven years. Before the Comcast deal closed, GE bought out the 20 per cent stake held by France’s Vivendi SA for $5.8 billion in order to complete the deal.
As part of Comcast’s takeover, NBC Universal changed its corporate logo to NBCUniversal — without the space, the peacock or the globe silhouette. Officially, the company’s name is still NBC Universal, but the space-less design was meant to represent the unity of its two main divisions.