(For more Reuters DEALTALKS, click [DEALTALK/])
* Fewer regulatory conditions on deal would boost M&A
* Acquirers could include Time Warner, News Corp
* Targets could include Scripps Networks, the CW
By Anupreeta Das and Jui Chakravorty
NEW YORK, Dec 3 Comcast Corp's (CMCSA.O) plan
to take a controlling stake in NBC Universal has spurred many
behind-the-scenes conversations, but whether any will result in
actual deals depends on the outcome of a regulatory review that
could take months.
Comcast on Thursday announced its deal to buy a 51 percent
stake in NBC Universal from General Electric Co (GE.N). GE will
eventually sell the remaining 49 percent to Comcast, giving it
full control of a rich array of programming and content,
including Universal Studios. [ID:nN03267923]
The deal will reshape the media industry by bringing
Comcast -- the top U.S. cable distributor and leading Internet
service provider to homes -- under the same umbrella as NBC
Universal, owner of cable TV networks like Bravo and CNBC.
U.S. regulatory scrutiny is expected to be heavy, and the
deal could take more than a year to be cleared. [ID:nN0387883]
Media dealmaking could pick up if regulators impose minimal
conditions on the NBC Universal transaction, said Brette Simon,
a mergers and acquisitions partner at law firm Jones Day.
"If the deal goes through in some measure, I think it will
absolutely drive more content-driven deals," Simon said. Rivals
will have to take stock of their position and consider what
strategic alternatives would make sense for them, she added.
Media industry watchers have called the deal a game-changer
for Comcast, which will now have control over the programming
it distributes through its cable and Internet operations, and
potentially command better terms from advertisers.
But the deal will also have wider implications for the
media industry, which is grappling with the challenges of
making money off consumers who increasingly get their news and
entertainment online or on the move.
THE BUYING PARTY
Cable and satellite operators, including Time Warner Cable
TWC.N, DirecTV DTV.O, Dish (DISH.O) and Charter
Communications CHTRa.BE, could seek to buy media content
companies, bankers and analysts said.
Last month, media mogul John Malone told the Associated
Press that the NBC Universal deal would give Comcast too much
market power and push rivals to consider similar deals. Malone
is chairman of Liberty Media LINTA.O, which is spinning off
U.S. satellite TV operator DirecTV into a separate entity.
While DirecTV could itself be snapped up in a year or two
by either Verizon (VZ.N) or AT&T (T.N) as these phone companies
seek to become bigger pay-TV players, the desire to own content
will drive most M&A, bankers and analysts said.
Verizon and AT&T have spoken to Liberty about DirecTV, but
talks fizzled over a few concerns including regulatory
approval, a source familiar with the matter said. The
discussions could regain traction if the Comcast-NBC deal get
the regulatory green light with few conditions, bankers said.
Companies that own cable channels, movie and TV libraries,
or create programming, such as Discovery Communications
(DISCA.O), The CW Television Network and Scripps Networks
Interactive SNI.N, could also become targets.
The potential sale of Metro-Goldwyn-Mayer, the famed and
debt-ridden studio, is likely to elicit interest from many
bidders, including Time Warner Inc (TWX.N), News Corp (NWSA.O)
and Lions Gate Entertainment LGF.N, sources have said.
"You now have ABC and Disney as a combined entity, next you
could have have NBCU and Comcast joining forces. Who's next?
CBS, Fox, the CW?" said a person who works on media deals.
Some media companies have already approached investment
bankers to assess their balance sheets and business models, and
figure out if they can compete with the Comcast-owned NBC
Universal, said a source familiar with these discussions.
These people spoke anonymously because many of these
discussions are confidential.
EXECUTIVES MULL OVER DEAL
In contrast to the bullishness of many bankers, media
industry executives have mixed feelings about the impact of the
deal on the industry.
IAC/InterActiveCorp IACI.O CEO Barry Diller called the
deal a "real shift" that will have a profound effect on the
media industry in the next few years.
But Time Warner Cable Chief Executive Glenn Britt debunked
the idea that his company would seek a similar deal. Merging
content and distribution brings no operating benefits, which is
why Time Warner spun off its cable operations, he said.
"What people do at Warner Bros. everyday are very different
than what I do... the businesses are very different. So you
really can't operate them together."
Christopher Vollmer, a partner at Booz & Co who specializes
in media and entertainment, said the industry has been active
in dealmaking this year, referring to The Walt Disney Co's
(DIS.N) $4 billion purchase of Marvel Entertainment Inc MVL.N
and Scripps Networks' acquisition of Travel Channel.
The Comcast-NBC deal will lead to more activity but "is
unlikely to be a catalyst for similar types of large-scale
deals that bring together content and distribution," he said.
"Where we do see more media M&A action ... is towards
higher growth areas such as video games, advertising/marketing
services and related technologies, Internet, and, perhaps, the
few remaining cable network groups that are not part of a major
conglomerate," Vollmer added.
(Reporting by Anupreeta Das and Jui Chakravorty, editing by
Tiffany Wu and Matthew Lewis)