Comcast Corp and General Electric Co are in talks that could lead to the sale of part or all of NBC Universal to the U.S. cable service company, according to sources close to the negotiations.
Shares in Comcast dropped 6 percent in early Thursday trade on the news, which comes after weeks of speculation about the fate of NBC Universal, owner of the well-known broadcast TV network, theme parks, a movie studio and cable channels like Bravo, USA, CNBC and MSNBC. GE shares dropped 1.5 percent.
The Comcast discussions are part of a range of options under consideration at GE, which owns 80 percent of NBC Universal, as partner Vivendi SA explores whether to sell its 20 percent stake. Other options include a public sale of Vivendi's stake or a deal with another media company or private equity group.
NBC, Comcast, Vivendi, and General Electric declined to comment on the talks.
But Comcast, which normally does not comment on takeover rumors, denied a Web report that surfaced late Wednesday that it had already struck a deal to buy NBC Universal for $35 billion.
We believe that GE's first preference is for a third party -- either strategic or private equity -- to take out Vivendi's 20 percent ownership stake should they exercise their exit option, Craig Moffett, an analyst with Bernstein Research, said in a research note.
In the event Comcast were to acquire their 20 percent interest it would include all of the regulatory burdens but none of the benefits of control, he added.
That drawback -- a significant one -- could also hold back other potential buyers, meaning any deal may include some option to buy GE's 80 percent down the road.
Vivendi's 20 percent stake is probably worth $4 billion to $5 billion, analysts have said, which could prove a steep price tag when all of CBS Corp carries a stock market value of $8.5 billion.
Under the terms of its 2004 deal with GE, Vivendi has the right to exercise its sell option each fall until 2016. GE has the right of first refusal to pick up the stake.
Comcast shares were down 98 cents at $15.89, while GE slipped 24 cents to $16.18 on the New York Stock Exchange.