* Comcast clinches full control of NBC for $16.7 billion
* NBCUniversal generated $23.8 bln in '12 revenue
* Shares touch $42 before retreating
* Theme parks a focus under NBC's CEO Burke
By Liana B. Baker
Feb 13 Stronger-than-expected growth in
NBCUniversal's entertainment unit gave Comcast Corp
the impetus to buy the rest of the company from General Electric
Co two years earlier than expected.
"NBCUniversal's 2012 results highlight in particular the
improving performance of our broadcast businesses," Comcast
Chairman and Chief Executive Brian Roberts said in a call with
analysts. "NBC's prime time performance this fall has been
"While we recognize it is early in the turnaround, this is
driving a big swing in momentum which should continue to help
NBCUniversal's cable networks, such as the Golf Channel, E!
and Bravo among others, rose 3.3 percent to $8.77 billion last
year. Cable networks have become the main growth driver in the
last few years for the industry.
Roberts said the numbers made an even stronger case for
buying out GE's 49 percent stake for $16.7 billion. The deal
values NBCUniversal at $39 billion.
Bill Smead, chief investment officer of Smead Capital
Management, who owns 273,000 of Comcast said he liked the deal
because Comcast will be able to make money on NBC's programming
as new ways to watch content emerge.
"There is a myriad of distribution systems that will pay for
NBC content in the future," he said.
Comcast said NBCUniversal's total revenue last year rose 13
percent to $23.81 billion. Its broadcast TV network, NBC, a
long-time industry laggard, saw the biggest revenue growth,
gaining 27.4 percent to $8.15 billion on the strength of popular
television events such as the Olympics and the 2012 Super Bowl.
Comcast shares touched a multi-year high of $42 on the
Nasdaq, before falling back to $39.99 in later afternoon trade,
still up 2.6 percent from Tuesday's close.
Marrying Comcast's more than 22 million cable subscribers
with its own and NBCUniversal's content assets is how the
company "strategically differentiates" itself from its
competitors, Roberts said.
Its rivals Viacom and Time Warner, separate
content from distribution.
NBCUniversal CEO Steve Burke, a longtime confidante of
Roberts, has targeted the Universal Studios theme parks as a
rich vein to tap for both growth and investment. Burke, who once
ran EuroDisney, cited theme parks as a major area of growth in
For the second year in a row, Comcast said it would boost
its capital investment plan at NBCUniversal, aiming for a 25
percent increase with a big chunk of that pledged to new theme
Comcast plans to bring its "Harry Potter" attraction to
Hollywood, for instance, taking aim at Disney's core
Wunderlich Securities analyst Matthew Harrigan estimates
that Comcast invested $155 million in theme parks last year.
"The parks are doing fabulously," said Harrigan. "They were
the poor cousin of Disney but not anymore."
Harrigan called NBCUniversal a "work in progress" that was
still stabilizing. While he agrees that NBCUniversal is headed
in the right direction, he said the Universal studio's full-year
operating cash flow in 2012 was underwhelming at $79 million, up
from $24 million in 2011.
In addition to the parks, Burke also spotlighted for growth
affiliate fees for NBC's cable networks, fees that pay-TV
operators give to programmers to distribute their networks, and
retransmission consent fees, or payments made to air a network's
He also said that the rate advertisers pay for commercials
on NBCUniversal properties is lower than rivals with weaker
ratings and could also improve this year.
Comcast, which ranks as the nation's largest pay-TV
operators and still receives the majority of its revenue from
its core cable systems business, said it would invest 10 percent
more in cable capital expenditures in a bid to increase Internet
As with most cable companies, its cable unit's growth is
coming largely from its Internet service. Last year, it added
1.2 million Internet customers while it lost 336,000 video
The cable business' programming costs should rise in the low
double digits this year, Comcast said. Comcast signed a new
distribution agreement with Fox on Tuesday for an undisclosed
sum that includes the rights for live and on-demand shows, as
well as access to Fox's programs on mobile devices.