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Comcast to buy control of NBC Universal in $30-billion transaction

The deal underscores how the high profit-margin business of cable TV has become the financial backbone of media conglomerates.

December 04, 2009|By Meg James

The new NBC Universal would have an advantage over its content-owning rivals: a cable TV pipeline reaching nearly a quarter of U.S. homes. That not only would give it an edge when it launches new cable networks but also would provide a huge base of customers for pay-per-view programming, including movies from the Universal movie studio.

Comcast also is the nation's largest provider of Internet broadband service and third-largest telephone company -- valuable conduits for new media.

"This is the future of television," said Paul Levinson, a communications professor at Fordham University in New York. "The traditional broadcast networks served people well during the 20th century, but not any longer. People like getting shows whenever they want, and on whatever device they might have: a television, their computer or mobile phone."

Comcast, as owner of more programming, would be "ideally suited to do all of these things," Levinson said. "How much longer could NBC go it alone as more people want to watch their shows through the Internet or on their iPhones?"

Comcast's move to acquire control of NBC Universal runs counter to the current trend of media giants shrinking. Many investors have concluded that the hoped-for "synergies" between content producers and distributors rarely deliver on their promise.

This year, for example, Time Warner Inc. unloaded its cable TV division and next week it plans to spin off its AOL unit. Roberts said Comcast's takeover of NBC Universal should not be viewed in the same light.

"Obviously AOL was a big part of their history, but it's not really relevant to what we are doing here today," Roberts said. "We are now taking stewardship of these wonderful businesses and believe we can take them even further."

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