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GE, Comcast Keep Options Open Amid NBC Deal Talk

Published: Wednesday, 21 Oct 2009 | 5:20 AM ET

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By: Reuters

The top executives of General Electric and Comcast, which sources say are negotiating a multi-billion dollar sale of NBC Universal, said they were keeping their options open but offered few hints of whether a deal may soon emerge.

On Tuesday, GE [GE Loading... () ] chief Jeff Immelt suggested a deal to sell its entertainment arm was not mandatory, with Comcast [CMCSA Loading... () ] widely reported to be in talks to buy a majority stake in TV and movie studio NBC Universal.

NBC Universal is CNBC's parent company.

The deal under consideration would combine Comcast's cable network assets and $4-6 billion cash with NBC Universal, creating a content powerhouse spanning TV broadcast, cable networks, movie and theme park assets.

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Under the envisioned deal, Comcast would take a 51 percent stake in NBC Universal and GE would own the rest of a company valued at around $30 billion, according to people close to the discussions.

But on Tuesday, both company head honchos played their cards close to the vest. Immelt said he was "totally" OK with retaining control of the TV and movie entertainment house, and that he was "comfortable" with the asset. Comcast Chief Executive Brian Roberts said he would look at all opportunities in the content business.

Addressing a tech industry forum in San Francisco, Immelt said: "There's lots of options -- one where we can control our own destiny, and think of a series of different options on our own schedule." "I like NBCU," he said.

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Bethany L King
NBC

"We've run it a long time; financially, the business is running in line with its peers." Both executives however would not comment directly on a potential sale, or even whether discussions were underway.

Speaking at the same forum, Roberts was positive about his company's interest in acquiring content.

"If there's an opportunity, whether it's the one you are talking about or other, our philosophy is it's prudent to think about it, look at it and beyond that we have to just wait and see," Roberts said.

Despite both executives showing up at the event, Immelt said he had not met with his Comcast counterpart on Tuesday.

All in Favor

Some analysts say NBC Universal — which also builds theme parks — is an incongruous asset in a General Electric portfolio that spans aircraft engines and power turbines, among other industrial arms.

Immelt said he had pondered various options for NBC, including an initial public offering for the TV and movie entertainment house. But he added GE now has to consider forging new partnerships to drive NBC, the nation's No. 4 network after falling through the rankings.

Talks between the companies have been handled by advisors from both sides, including investment bankers. Comcast is also being advised by former News Corp president Peter Chernin, according to people familiar with the talks.

Though GE owns 80 percent of NBC Universal, any deal between Comcast and GE would depend on NBC Universal's current 20 percent-owner Vivendi agreeing to sell its shares to GE at an agreed price. Vivendi's annual option to sell its stake comes up in a few weeks.

To some investors, Comcast's bid might trigger a sense of deja vu. In 2004, Roberts launched a hostile and audacious $54 billion bid to buy Walt Disney [DIS Loading... () ], but ultimately failed.

Since then, investors have feared the cable company would make a similarly large and possibly value-depletive deal.

Some industry watchers believe Comcast's reported interest in NBC has been partly driven by a desire to have a say in Hulu, the popular TV show Web site jointly owned by NBC, News Corp [NWS Loading... () ] and Walt Disney. Cable companies concerned that users might start cutting subscriptions if they can see favorite shows online for free.

But Immelt said he was in favor of putting more content on the Web, saying Hulu has been a great experiment. "I am a big fan of comedy shows," Immelt said. "And I'll occasionally watch them on Hulu, though it is not part of my daily workflow the way it is for my 22-year-old daughter."

If Comcast buys a stake in NBCU, it could also get a part of Hulu and the ability to provide more content online.

It has already led an initiative called On Demand Online/TV Everywhere, which allows paying cable subscribers to watch their shows on demand over the Web when they want.

The move is an attempt to preserve a long-standing, profitable cable TV business, which generates revenue from cable subscription fees and advertising. Comcast is currently testing On Demand Online in 5,000 homes.

Roberts gave a demo of the service, saying delivering video over the Internet is a "friend not foe." He said Comcast will launch a full Web-based on-demand service to Comcast customers who subscribe to HBO before the end of the year.