Sources: Comcast weighs buying NBC Universal

PHILADELPHIA (AP) — Comcast Corp. is exploring whether to buy a controlling stake in NBC Universal, which would increase Comcast’s ownership of the TV shows and movies it distributes to its cable subscribers, people familiar with the negotiations told The Associated Press on Thursday.

General Electric Co., which owns 80 percent of NBC Universal, has been in talks with Comcast to unload part of the entertainment unit, according to people familiar with the negotiations.

These people described the situation on condition of anonymity, confirming earlier reports, because the negotiations are still preliminary.

Earlier in the day, the same people said Comcast was negotiating whether to take a 20 percent to 50 percent stake. But later, they said one scenario is for NBC Universal to be spun off into a separate company. Comcast would own 51 percent, and GE would hold the rest.

Comcast would pay $4 billion to $6 billion in cash for its stake in the company, which would have about $12 billion in debt.

One key element is whether French conglomerate Vivendi SA decides to sell its 20 percent stake in NBC Universal. It has an annual window from Nov. 15 to Dec. 10 to unload the holdings, and its CEO has called the stake “noncore.”

If Vivendi, thought to be eyeing an investment in telecommunications, does sell, GE is expected to buy the stake.

Comcast, the nation’s largest cable-TV provider, then could purchase Vivendi’s 20 percent stake and take part of GE’s holdings as well.

GE could use the money. GE has spent much of the past year focused on the struggles of its giant GE Capital finance unit, which has posted big losses, forcing GE to inject cash into the unit and raise money from outside sources.

NBC Universal has also suffered during the financial crisis, with a sharp decline in advertising revenue. The NBC network also is in fourth place in the ratings, which spurred its decision to move Jay Leno into prime time. Meanwhile, Universal Pictures has seen mixed box office results, and attendance at Universal theme parks is down.

The division’s profits were off by 41 percent in the second quarter.

NBC Universal also owns the Telemundo network and such cable channels as Bravo, USA Network and CNBC, which Comcast pays to show to its subscribers.

The recession hasn’t been as tough on Comcast, in part because people have opted to stay in to watch TV instead of going out.

Comcast’s balance sheet showed $4 billion in cash and cash equivalents as of June 30, and the company whittled its debt in the past 18 months to $29 billion. The company has said it plans to keep paying a dividend and buying back shares.

A stake in NBC Universal could make sense for Comcast.

Comcast has 24 million subscribers, roughly a quarter of the nation’s cable TV customers, and has said that reaching significantly more people isn’t currently a priority.

But it hasn’t made a secret of its desire to own more programming. Comcast already owns such cable TV networks as E!, Style and sports channels, and in 2004, it made a $54 billion hostile bid for Walt Disney Co., which was rejected.