How Comcast Acquired NBCUniversal
The advertising revenues for Comcast’s NBCUniversal Cable Networks and Broadcasting Television segment are susceptible to advertising cyclicality and program ratings.
Dec. 23 2015, Updated 12:49 p.m. ET
History of NBCUniversal
In January 2011, Comcast (CMCSA) got approval from the FCC (Federal Communications Commission) for the acquisition of a 51% stake in NBCUniversal from General Electric (GE). Before January 2011, GE owned 80% of NBCUniversal, and it was “generating an average annual return of 11%” for the company. The reason GE brought down its stake in NBCUniversal to 49% was because GE wanted to focus more on the company’s “diversified infrastructure” business.
Comcast acquired the 51% stake in NBCUniversal for a cash payment of $6.2 billion and also contributed the Comcast Content business to the joint venture, which included some of Comcast’s regional sports networks and cable channels like E!. The chart below indicates the ownership structure in 2011 when Comcast acquired a 51% stake in NBCUniversal from GE.
Comcast bought GE’s remaining stake
On February 12, 2013, Comcast (CMCSA) announced that the company will acquire General Electric’s (GE) remaining 49% stake in NBCUniversal for $16.7 billion. Comcast also announced that NBCUniversal will buy office properties used previously by NBCUniversal but owned by GE.
Comcast acquired GE’s remaining stake in NBCUniversal, as it believed that NBCUniversal’s businesses could generate long-term value for the company. This transaction comprised of $11.4 billion in cash, $2 billion in debt, $725 million of preferred stock issued to GE, and $4 billion of senior unsecured notes issued to GE.
In the next parts of this series, we will explore Comcast’s NBCUniversal businesses in greater detail. Comcast makes up 2.6% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ has 4.4% exposure to the Television & Radio sector. QQQ invests 4.8% of its holdings in Alphabet (GOOG) and 5.9% of its holdings in Amazon (AMZN).