IRL TV Ratings to take a big jump or stay in the dump?
12/02/09 For years, competitors have tried to challenge ESPN. Their efforts failed or never advanced beyond big talk.
Comcast’s impending acquisition of NBC Universal will certainly set off an effort to turn Versus into a viable alternative, if not a full-fledged competitor, to ESPN. Under Comcast’s ownership, Versus has transformed from the Outdoor Life Network to OLN, then, in 2006, into its current incarnation.
But Versus is a second-tier network whose highest-profile sports, the N.H.L. and the Tour de France, aren’t blockbusters. It lacks a studio show that would give it identity, like ESPN’s “SportsCenter," or an announcer who is its defining personality.
Versus (and its sister network, the Golf Channel) will be turned over to NBC for an overhaul, assuming regulators approve the deal, a process that could take 12 to 18 months. Versus will probably be renamed something like NBC Sports Cable to reflect a more defined sports brand. On-air and production talent would migrate from NBC, to a certain extent, although Bob Costas would not be hosting IndyCar races.
Versus and Golf would certainly be overseen by Dick Ebersol, the chairman of NBC Universal Sports, who has never had a sports cable network to tinker with (the expanding Universal Sports channel is distributed through NBC stations and affiliates); he would no doubt quickly strip Versus of its current crop of late-night infomercials. More at NY Times
[Editor's Note: See this related AutoRacing1.com article on why the Versus deal may turn out to be a boon for IndyCar after all. We do find it very interesting that the largest investment Versus has made in broadcast rights, IndyCar, was not even mentioned in this article as a Versus signature high-profile sport. This shows that Versus still has a lot of work to do with the IRL brand.]
12/01/09 General Electric Co. and Vivendi SA agreed on a $5.8 billion valuation for the French telecommunications company’s 20 percent stake in NBC Universal, according to two people with knowledge of the discussions.
A deal with Vivendi would clear the way for GE, NBC Universal’s 80 percent owner, to create an entertainment joint venture controlled by Comcast Corp., the largest U.S. cable company. Final agreements on both transactions may be announced as soon as this week, said one of the people, who declined to be named because the discussions are private.
The agreement on price was reached after GE Chief Executive Officer Jeffrey Immelt and Vivendi Chief Jean-Bernard Levy met in France last week. The sides had been less than $500 million apart and were discussing how payments would be structured, two people said on Nov. 25. Vivendi extracted more money than analysts expected and concessions that protect the Paris-based company against the risk regulators will scuttle the deal.
“From Vivendi’s point of view, the good news is that this effectively leaves them to go back to their investors and say they were able to monetize a minority stake at a good level," Claudio Aspesi, an analyst at Sanford Bernstein in London, said by phone. “That’s the best management can be expected to do."
Selling Comcast control of NBC would let Immelt use proceeds to concentrate on GE’s financial, health-care and industrial businesses, which include the world’s biggest maker of jet engines, locomotives and medical imaging machines. GE would initially have a minority stake in the NBC Universal entity, selling the rest over a number of years.
Concessions
Vivendi rose as much as 3.3 percent in Paris, advancing 61 cents, or 3.2 percent to 19.80 Euros at 1:22 p.m. GE rose 8 cents to $16.02 yesterday in New York Stock Exchange composite trading. Philadelphia-based Comcast lost 22 cents to $14.66 on the Nasdaq Stock Market.
GE agreed to make a payment of as much as $2 billion to Vivendi if the separate GE-Comcast transaction doesn’t close by the end of 2010, said one of the people.
Antoine Lefort, a Vivendi spokesman, declined to comment as did Anne Eisele, a spokeswoman for GE, and D’Arcy Rudnay, a Comcast spokeswoman.
“It worked out a little higher than what I had anticipated," said Tuna Amobi, a New York-based analyst at Standard & Poor’s who covers the entertainment industry. “Vivendi was able to squeeze out an additional $250 million."
Vivendi sought cash upfront and assurances of a payment if Comcast’s control of NBC Universal doesn’t pass regulatory review, Amobi said.
GE Exit
The agreement with Vivendi is likely to set the benchmark for a final NBC Universal valuation as Comcast and GE finish their talks, said Amobi. GE and Comcast valued the entertainment unit at about $30 billion, three people said on Nov. 9.
On Vivendi’s balance sheet, the NBC Universal stake is carried at about 4.3 billion Euros ($6.5 billion).
Comcast would initially own 51 percent the new company, gaining control of NBC Universal’s broadcast network, theme parks, movie studio and cable-television channels USA, Bravo, CNBC and MSNBC. The cable operator would contribute cash and cable networks E! Entertainment, Versus and Golf Channel, people with knowledge of the discussions said in October.
GE would have the ability to sell the rest of its stake in phases over several years, people familiar with the plan’s details said on Oct. 12. The entity would carry about $9 billion in debt and fund the subsequent equity purchases with cash from operations, the people said. Comcast could alternately commit additional cash.
‘Fair Value’
The final price to Comcast may be lowered by a mechanism in the agreement crediting the cable company with some of NBC Universal’s cash flow when the deal closes, the Wall Street Journal reported yesterday.
GE has owned NBC since the 1986 acquisition of RCA Corp. Immelt, CEO since September 2001, expanded the unit through the acquisitions of Bravo, Telemundo and the 2004 transaction with Vivendi, which brought theme parks, a movie studio and cable networks.
NBC Universal reported a 27 percent drop in profit for the nine months to September, Fairfield, Connecticut-based GE said Oct. 16.
“That Vivendi got a fair value when there’s only one buyer and they clearly want to exit is a good thing," said Conor O’Shea, an analyst at Kepler Capital Markets in Paris.
Yesterday, GE lost its bid for Paris-based Areva SA’s transmission and distribution unit, which Immelt had sought to add to its GE Energy Infrastructures division, the world’s biggest provider of power-plant equipment and services.
Vivendi has an annual window in which to sell its stake between Nov. 15 and Dec. 10 until 2016. CEO Levy is expanding in developing regions like Latin America and Africa. On Nov. 13 the company said it had won control of Brazilian telephone operator GVT (Holding) SA for about $4.18 billion, outbidding Spain’s Telefonica SA. Bloomberg.com
11/17/09 There was a time that only three major networks made up the landscape of television programming. When cable first emerged it was seen as Daniel going up against Goliath. Like the story, Daniel has won with the news that cable television operator Comcast is set to take majority ownership of NBC Universal.
The Associated Press is also reporting that the current majority owner of NBC Universal, General Electric, is set to buy a 20% minority owner stake in the media company from Vivendi SA to flip around and sell a 51% stake to Comcast. Comcast already owns several cable-based networks including E!, Style Network, Golf Channel, VERSUS, G4 and PBS KIDS Sprout. The purchase of NBC Universal will not only add NBC, but its other network properties which include USA, SyFy, CNBC and The Weather Channel.
Executives of NBC may want to touch up their resumes with the sale to Comcast looming. If you consider that NBC is in fourth place among the major networks there is no doubt that there will be several executives shown the door. By the time the smoke clears there will probably be prime time shows that are ditched as well. Comcast knows the ship is sinking and it is not going to let the crew that drove the ship into the iceberg remain in place. Read more at the AP article
11/11/09 Vivendi, the French media conglomerate, could disclose plans for its 20 percent stake in NBC Universal Inc. tomorrow, when it announces third-quarter earnings and plans to hold a conference call with financial analysts in Paris.
Comcast Corp. and General Electric Co. have agreed to form a joint venture giving control of NBC Universal to the Philadelphia cable giant, one of the nation's largest purchasers of entertainment.
But the deal is contingent on Vivendi's agreeing to sell its 20 percent stake to GE, which owns the other 80 percent.
Vivendi could seek a higher price from General Electric for its ownership interest in NBC Universal, European analysts warn.
The French company was expected to use proceeds from its sale of NBC Universal to buy a Brazilian phone company. Those plans now may be on hold because a Spanish telephone firm is bidding against Vivendi, which will drive up the cost for Brazil's GVT SA.
Vivendi is expected to walk away from GVT rather than pay a large premium for it.
"Without GVT, there is no pressure on Vivendi," said Alexander Wisch, an equity analyst with Standard & Poor's in London.
"Without GVT, I don't see why they should hold cash," Wisch told Bloomberg News. "There's less pressure on Vivendi to do the deal with NBC Universal than last month."
On its balance sheet, Vivendi has valued its 20 percent NBC Universal stake at $6.3 billion.
The company has scheduled its quarterly conference call for 6 p.m. in Paris, noon Philadelphia time. Vivendi has until mid-December to make an official decision on NBC Universal.
Vivendi spokesman Simon Gillham has said the firm is in no hurry to unload its ownership stake in NBC Universal; Vivendi chief executive officer Jean-Bernard Levy has said he would like to expand into emerging markets.
In advanced talks on a deal, Comcast and GE value NBC Universal at roughly $30 billion. Comcast has agreed to acquire 51 percent of NBC Universal now, but the deal is dependent on Vivendi's actions.
Comcast will buy the remaining 49 percent of NBC Universal over seven years with cash flow from its new acquisition. Sources say Comcast has guaranteed it will have the money to complete the ownership transfer with a "backstop" fund.
If NBC Universal's cash flow fails to produce the money to buy the remaining 49 percent from General Electric, Comcast will cover the shortfall with its cable, phone, and Internet operations, sources say. Philadelphia Inquirer
11/11/09 UPDATE See our article on this very topic. If this happens, it will make the Versus deal look a whole lot smarter than any of us thought…
General Electric Co. and Comcast Corp. have settled on how to value NBC Universal now and in the future, clearing a key obstacle to giving Comcast control of GE's television and movie company, according to people familiar with the matter. After weeks of wrestling, both sides have agreed to value NBC Universal at around $30 billion, people close to the talks said. The agreement includes a mechanism that could reduce the cash Comcast would have to kick in when the deal closes. The two companies are now ironing out the final details of an agreement. An announcement could come as early as the end of this week. While the deal is advanced, it is possible negotiations could be delayed or unravel. One wild card remains French media and telecom company Vivendi SA, which owns 20% of NBC Universal. Vivendi has told 80%-owner GE that it wants to sell its stake this year, according to people familiar with the matter. It is unclear whether Vivendi has agreed to the deal being considered by Comcast and GE. A Vivendi spokesman declined to comment on its plans. The company may offer more details when it reports third-quarter earnings Thursday. A Comcast-NBC Universal tie-up would merge Comcast's cable networks with NBC Universal's TV networks, movie studio and local TV stations, creating a mammoth media concern controlled by the U.S.'s largest cable operator. The deal would also, over time, ease GE out of its two-decade involvement in the entertainment industry.
Last Thursday, GE and Comcast met with debt-rating companies to seek their opinions on the approximately $9 billion in debt NBC Universal would take on as part of the combination. The parties want NBC Universal's debt to be investment-grade. The debt rating is an important element of the deal because NBC Universal would use its borrowing capacity to help buy out the stakes of both GE and Vivendi. GE and Comcast are hoping for a signal this week on how the ratings firms would regard NBC Universal's debt, people familiar with the meetings said. In the deal under consideration, Comcast would contribute cash and merge its cable networks with NBC Universal to get an initial 51% stake of the expanded company. GE would at first hold the remainder, while Vivendi would be bought out entirely. The value that NBC Universal and the assets Comcast would contribute to the expanded company have been sticking points. Comcast had pushed to lower the value of the existing NBC Universal and raise that of its own cable networks to minimize the cash it would need to inject to reach 51% of the combined entity, people close to the talks say. To resolve the impasse, GE and Comcast created a mechanism that would base Comcast's cash payment, in part, on NBC Universal's financial performance before the deal closes, said people familiar with the matter. If NBC Universal's performance worsens in the months between signing the deal and when it receives regulatory approval and finally closes, Comcast could end up paying less, these people said. People close to the talks have said they expect the deal could take at least eight to 12 months to pass regulatory muster. Comcast and GE have also resolved how to value the new entity in the years after the deal closes, people close to the talks said. That is important because, under the deal, GE's remaining 49% would be bought out over seven years after closing, primarily using NBC Universal's cash flow and borrowing ability, these people said. GE wouldn't receive a guaranteed price for that stake, according to people familiar with the talks. Rather, the deal would use a formula to value GE's remaining stake through a public-markets comparison of similar businesses, two of those people added. That element of the deal could protect Comcast, which has agreed to backstop NBC Universal's obligations to buy out GE up to about $6 billion, the people said. If NBC Universal and similar businesses perform poorly in coming years, the formula could reduce what NBC Universal has to pay to GE, they added. News Corp., which owns The Wall Street Journal, had held preliminary conversations with GE about an alternative deal involving NBC Universal. Those discussions have ended, according to people familiar with the matter, who said the talks never advanced far. "When things come around, we kick the tires, but we're not in any talks with anybody at the moment," News Corp. Chairman and Chief Executive Rupert Murdoch said in a conference call last week, in response to a question about a possible NBC Universal deal. wsj.com
11/03/09 There has been a lot of water-cooler talk and debate around the AR1 offices this past week about the Versus deal, and what is really going on there…and we touched on this very topic that there might be something the IRL has been told, that we have not. This could be just that…
From the Nov 1st NY Times:
General Electric and the cable giant Comcast have moved closer to a deal giving control of NBC Universal to Comcast, and a formal announcement could be made sometime next week, people briefed on the talks said Sunday.
After a series of meetings last week, the two companies reached a tentative agreement on Friday over the main points of a deal, these people said. Comcast would own about 51 percent of NBC Universal, contributing several billions of dollars in cash and its own stable of cable networks to the new venture.
G.E., which currently owns 80 percent of the entertainment company, would retain the other 49 percent and would contribute about $12 billion in debt to the new entity, though it is expected eventually to sell its ownership interest over several years.
Much work remains before the deal can be completed. The main issue is the negotiations with Vivendi, the French conglomerate that owns 20 percent of NBC Universal. Talks with Vivendi are continuing, focused largely on how to reach an acceptable valuation of NBC Universal, these people said. The French media company gained its stake in NBC Universal in 2004 through a deal with G.E., which combined NBC with Vivendi’s Universal Entertainment.
Vivendi’s chief executive, Jean-Bernard Lévy, said at an industry conference last week that his company might seek to sell its stake in NBC Universal through an initial public offering. Under the terms of its agreement with G.E., Vivendi has the right from mid-November to mid-December to sell its stake in NBC Universal. But analysts largely expect G.E. to reach a deal to buy Vivendi’s stake.
Talks with Vivendi may still fall apart, people familiar with the talks cautioned.
Other potential bidders have surfaced, including the News Corporation. But talks between G.E. and Comcast have advanced far enough that a deal with another company was unlikely, people briefed on the matter said.
Comcast and G.E. plan to take care of other deal matters, including presentations to credit ratings agencies like Standard & Poor’s and Moody’s Investors Service, later this week, these people said. Even if a deal is completed by next week, it would still require regulatory approval, a process that could take several months.
If a deal is completed, it would help diversify Comcast’s holdings beyond its cable television operations, a longstanding goal for its chief executive, Brian Roberts. He has been heavily involved in the talks, these people said.