Comcast all in on NBCUniversal; broadband subs drive Q4
Comcast announced yesterday that it was buying out General Electric’s 49 percent stake in NBCUniversal for $16.7 billion instead of waiting until next year’s previously scheduled date of July to take full control of NBCUniversal.
Comcast and GE also struck a deal for the GE properties that NBCUniversal used at 30 Rockefeller Plaza in Manhattan and CNBC’s headquarters in Englewood Cliffs, N.J., for approximately $1.4 billion. The transaction is subject to customary closing conditions and is expected to close by the end of the first quarter of this year.
“This is an exciting day for Comcast, as we have agreed to accelerate the purchase of NBCUniversal. The management team at GE has been a wonderful partner during the past two years, and their support has been very valuable. Our decision to acquire GE's ownership is driven by our sense of optimism for the future prospects of NBCUniversal and our desire to capture future value that we hope to create for our shareholders,” said Comcast Chairman and CEO Brian Roberts. “We believe the terms of the transaction are attractive and have planned for this event by taking a number of financial steps to prepare our balance sheet. We believe we are in a strong and unique position to continue to grow and build value in our combined company.”
The transactions will be funded with $11.4 billion of cash on hand, $4 billion of subsidiary senior unsecured notes to be issued to GE, $2 billion of borrowings under Comcast and/or subsidiary bank credit facilities, and $725 million of subsidiary preferred stock to be issued to GE.
In 2009, Comcast first expressed interest in buying the 51 percent stake in NBCUniversal from General Electric Co. for $13.8 billion in cash and assets. Comcast subsequently won governmental approval for the deal in 2011.
Comcast’s decision to finalize full ownership of NBCUniversal signaled that the nation’s largest cable operator was comfortable with its growth prospects, which was also reflected in its fourth-quarter earnings report that was issued yesterday.
Comcast earned $1.52 billion, or 56 cents per share, in the fourth quarter compared to $1.29 billion, or 47 cents per share, in the same quarter a year ago. Comcast’s revenue rose 6 percent to $15.94 billion from $15.04 billion.
Accounting for one-time items and a tax-related gain, Comcast’s adjusted earnings were 52 cents per share in the fourth quarter. Analysts had projected earnings of 54 cents per share on revenue of $16.01 billion.
Broadband continued to be a shining star for the nation’s largest ISP, as Comcast added 341,000 broadband customers in the quarter – topping the prior year’s 336,000 additions – for a total of 19.4 million data subscribers.
Comcast stemmed the tide on video losses in the fourth quarter by losing 7,000 subscribers compared to 17,000 in the same quarter a year ago. The video subscriber losses were the ninth-straight quarter in which Comcast had lowered its basic video subscriber defections.
Phone connections increased by 168,000 in the fourth quarter to top the 146,000 additions in the same quarter a year ago.
Revenue for the cable operations increased 7 percent to $10.1 billion in the fourth quarter of 2012, compared to $9.5 billion in the fourth quarter of 2011, driven primarily by growth in data and business services. Thanks to the election cycle last year, advertising revenue increased 19 percent.
Capital expenditures for the cable operations increased $59 million, or 4.5 percent, to $1.4 billion in the fourth quarter of 2012, primarily reflecting increased spending on consumer premises equipment, such as advanced digital boxes and wireless gateways, and the expansion of business services and Xfinity Home.
“To underscore our confidence, we are increasing our dividend by 20 percent and plan to repurchase $2 billion of our stock this year,” Roberts said. “Our businesses have real momentum, and we continue to benefit from our focus on operational excellence and to leverage all of our content and technology platforms to expand the entertainment choices we offer consumers. Cable’s fourth-quarter and full-year results demonstrate consistent improvement in customer metrics and growth in every product, led by high-speed Internet.
“Our ongoing investments in programming, technology and new products are driving innovation and supporting this strong performance. As we begin 2013, our scale in distribution and content, combined with our focus on execution and innovation, provides many opportunities to continue to build value for our shareholders.”