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GE, Vivendi Deal Clears Path for Comcast to Buy NBC

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According to media reports, General Electric Company has reached an agreement pay French media conglomerate Vivendi SA a little under $6 billion for its 20 percent stake in NBC Universal, clearing the path for General Electric to sell a controlling stake in NBC to cable operator Comcast. Although the deal has been in the works for months, negotiations between GE and Vivendi are taking longer than the parties anticipated, with Vivendi apparently holding out for over $6 billion for its one-fifth share of NBC.

The companies are still finalizing terms of the sale, and no formal announcements have been made.

GE’s buyout of Vivendi’s interest in NBC Universal would clear the way for GE to sell a 51 percent controlling stake in NBC to cable operator Comcast, in a mega-deal valued at about $30 billion. By acquiring a controlling stake in a broadcast television network—as well as the network’s cable and online properties—Comcast will position itself as one of the United States’ largest entertainment conglomerates, in addition to already being the nation’s largest provider of broadband Internet services. The move also puts Comcast into the content creation business, with an integrated media business model not unlike another American entertainment giant: Disney.

Vivendi’s annual window to sell off portions of its stake in NBC Universal ends December 10; GE has the right of first refusal on any sale Vivendi wants to make. However, whatever price GE winds up paying for Vivendi’s share of NBC won’t impact Comcast: according to sources, Comcast’s agreement with GE locks in a price: if GE overpays for Vivendi’s stake, that money will come out of GE’s pocket, not Comcast’s. The Wall Street Journal reports (subscription required) GE will pay $5.8 billion for Vivendi’s stake.

Some critics and consumer rights advocates have decried the potential takeover of NBC by Comcast as giving the Philadelphia-based cable operator too much influence in the entertainment industry. On the Internet front, Comcast has already proven it is not above using traffic manipulation and forged packets to control what it customers can and cannot do on the Internet—the actions led to an FCC sanction last year. However, Comcast eyes the acquisition as a way to better compete with online, satellite, and mobile operators that offer TV subscription services, as users increasingly cut back or cancel their cable services in favor of online or mobile programming options.

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