Breakingviews | GE/NBC

Feature

16 Oct 2009 14:49

To kill a peacock

Context News

General Electric and Comcast are working on a deal to spin off GE's NBC Universal into a new jointly owned entity.

One possible scenario is for GE to buy out Vivendi's 20% stake in NBC for about $5bn, valuing the entire pre-deal NBC at around $24bn. The standalone NBC would also take on or raise debt, enabling GE to reduce its debt load. Comcast would pay cash to GE and contribute assets to NBC in return for a 51% stake in the media group, which would then have an enterprise value of some $30bn. Over time, GE could then sell its remaining stake to Comcast.

GE earnings release

The US industrial conglomerate may finally part ways with the media arm it spent 24 years and at least $33bn assembling. A Comcast deal valuing NBC at $24bn wouldn’t be a total disaster – but Rob Cox and Aliza Rosenbaum say it’s hardly a vindication of GE's management philosophy.

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