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Sean Daly, Michelle Stark and Sharon Kennedy Wynne

Comcast buys stake in NBC Universal: What makes this deal better than all the other failed media mergers?

3

December

Comcast As Comcast finally confirms a more than $30-billion deal to buy control of NBC Universal from General Electric, there is one question which remains largely unanswered, after months of watching this deal take shape in public.

What makes this media merger better than all the other failed acquisitions in recent years?

Certainly the deal is big, combining the nation's largest cable provider with a company controlling a major TV network, cable channels such as USA Network and Syfy, the Universal movie studio, the Spanish language channel Telemundo, about a dozen local TV stations and a stake in the online video Web site Hulu.

(The New York Times parses the numbers, including $6.5-billion in cash committed by Comcast, G.E. buying out partner Vivendi for $5.8-billion and NBC Universal borrowing $9.1-billion from banks to pay GE.)

But some of the synergies which would make this deal attractive are also the same issues which would draw the concern of federal regulators, who must approve creation of a company reaching one-quarter of all cable TV homes and owning one of every seven TV channels.

Nbcuniversal Comcast has already sent a letter to key lawmakers, promising not to take certain actions that might draw concern from media watchdogs. Among their pledges: to keep NBC as a broadcast network, to keep 75 percent of its on demand programming at no additional charge for three years, to strengthen children's programming, to maintain a committment to diversity, to bargain in good faith with rival cable companies and other TV providers for content they control, allow NBC's news coverage to proceed without interference and honor NBC union contracts.

But if NBC Universal shows don't get preferred slots on Comcast cable systems, or NBC must remain as a fourth-place broadcast network or Comcast can't charge rival TV service providers higher rates for popular cable channels such as USA Network or Bravo, can the deal really make sense financially?

Certainly, Comcast and NBC's rivals will be pressing leislators to parse the deal closely and wring more concessions from the new company. And the past failure of big media mergers such as the AOL Time Warner deal -- considered by some to be the worst merger in history, with AOL due to be spun off soon from the downsized company -- only adds question marks to this undertaking.

As CBS anchor Dan Rather pointed out recently, former GE chairman Jack Welch was fond of fending off NBC sale rumors by calling the media company a crown jewel; late as last year company officials denied rumors they might sell NBC Universal.

Now with the deal to transfer power revealed, Comcast must prove that a media-based cable company can be a better steward for one of the nation's largest TV providers than a company best known for making missles and household appliances.

At a time when even Oprah Winfrey is betting the future of her brand on cable TV, that might not turn out to be a bad wager.

See the two big honchos who will run comcast and NBC interviewed on CNBC below:

[Last modified: Wednesday, July 21, 2010 3:03pm]

    

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