General Electric Co and Comcast Corp are set to announce a joint venture on Thursday morning that would give the cable company eventual control of NBC Universal in this year's biggest media deal.
The deal values NBC Universal at about $30 billion and Comcast's cable networks at $7.25 billion, sources familiar with the matter said on Wednesday.
The announcement would complete talks between Comcast and GE that began in March, one of the sources said.
In addition to its cable channels, Comcast would contribute up to $6 billion of cash to the proposed joint venture, the sources said. Comcast's final cash payment would depend on NBC Universal's performance between the signing and closing of the deal, one of the sources said.
Comcast would own 51 percent of NBC Universal and GE would own the remainder, sources have said.
Media mogul and IAC/InterActiveCorp Chief Executive Barry Diller was bullish on the proposed deal, calling it a real shift that will have a profound effect on the media industry in the next few years.
This is not expansionism a la conglomerates of the past in media, Diller said at the Reuters Global Media Summit on Wednesday. This is a very disciplined, very smart group with huge resources in their cable, telephony, data businesses that is doing this with an absolute sense of strategy.
The new company, which will retain NBC Universal CEO Jeff Zucker as its chief, is expected to be able to generate cash to pay down $9 billion of debt that would be added to its books as part of the agreement. It would use that debt to buy the rest of the company from GE.
GE has negotiated an option that would give it the right to redeem all or part of its stake in the new company in exchange for cash at a 3-1/2-year mark and at a 7-year mark, sources have said.
The deal is expected to face a lengthy regulatory review, with many industry experts saying it could take more than a year. Regulators could impose restrictions on Comcast, some of which could force its hand in fee negotiations with rivals.
Comcast has long wanted to buy media assets to create a content powerhouse spanning broadcast TV, cable and film. Chief Executive Brian Roberts said last month he would look at all opportunities in content.
Many of GE's shareholders have urged the conglomerate to offload NBC Universal, whose broadcast and cable networks, movie studio and theme parks are considered misfits among GE's mostly industrial operations.
WAIT FOR VIVENDI OVER
GE, which owns 80 percent of NBC Universal, had ironed out the deal with Comcast a few weeks ago, but the two sides were waiting for Vivendi SA , which owns the remaining 20 percent, to reach a deal with GE.
Vivendi, which could have aborted the Comast-GE deal by not selling its stake to GE, had been negotiating the price it could get for its stake.
The two agreed to a deal in which GE would buy Vivendi's stake for $5.8 billion after the chief executives on both sides met in Paris last week, a source familiar with the matter said on Monday.
Vivendi had originally valued its 20 percent stake in NBC Universal, acquired in 2004, at $6.1 billion, sources told Reuters last month. But the two sides differed on valuation, slowly narrowing their gap over the past few weeks.
The two sides also differed on when Vivendi would get paid. Vivendi initially wanted the entire payment upfront, while GE wanted to pay after its deal with Comcast closed. On November 20, a source familiar with the negotiations told Reuters that Vivendi had agreed to accept payment for one-third of its stake, or about $2 billion.
This amount would be paid several months after Comcast and GE agree to a deal, the source said.
Comcast declined to comment and NBC Universal was not immediately available for comment.
(Editing by Steve Orlofsky)