Comcast silences the NBCUniversal skeptics

The cable giant assumes full control of the entertainment conglomerate for $16.7 billion.

By Jonathan Berr Feb 13, 2013 1:15PM
Image: Watching television (Klaus Tiedge/Getty Images/Getty Images)When Comcast (CMCSA) CEO Brian Roberts announced plans in 2009 to acquire a controlling stake in NBCUniversal, Bernstein Research was skeptical and issued a report titled "Comcast: Snatching Defeat From the Jaws of Victory?"   

Wall Street was singing a different tune Wednesday after the cable giant agreed to buy General Electric's (GE) remaining stake in NBCUniversal for $16.7 billion.

"Comcast got it at a steal, a phenomenal price," said Wunderlich Securities analyst Matthew Harrigan in an interview with Bloomberg News. He rates the Philadelphia company as a "buy" and thinks that NBCUniversal is still undervalued.

Shares of Comcast, the largest cable company, rose 5% Wednesday, in part because it is buying out General Electric earlier than anticipated. GE shares were up nearly 3%; the stock was the biggest gainer in the Dow Jones Industrial Average. 

At the time of the 2009 deal, memories of Comcast's 2004 unsuccessful takeover bid for Walt Disney (DIS) were still fresh in the minds of some investors. Moreover, NBC was stuck in fourth place among broadcast networks. To top it off, there weren't many synergies between NBCUniversal and Comcast.

Comcast, though, was able to do something that Wall Street didn't expect -- turn NBC around. The network has scored huge hits from "The Voice" and Sunday night football programing. These days, the Peacock Network is No. 2 in the ratings behind CBS (CBS) both in total viewers and those aged 18 to 49, the demographic targeted by advertisers, according to Bloomberg News.  

Challenges remain at NBC. The New York Post recently noted that the network's ratings have plunged since the start of the year because it wasn't able to count on "The Voice" or football. Both Roberts and Wall Street seem to think that the ratings will come back. Comcast also is benefiting from improved box-office returns at Universal Pictures and rising attendance at Universal's theme park business.

Wall Street has rewarded investors for their faith in Comcast. Shares of the company have soared more than 142% since 2008, and analysts think the stock has more room to run. The average 52-week price target on the stock is $43.64, about 5% higher than where it currently trades.

In a related development, Comcast also is acquiring NBCUniversal's floors in its iconic 30 Rockefeller Plaza building and CNBC's headquarters building in New Jersey for $1.4 billion.  Roberts declined to comment to The Wall Street Journal on whether Comcast would take the GE sign down from the Rockefeller Plaza tower.

That's not surprising. As media moguls go, Roberts is fairly low key. He even enjoyed the gentle ribbing Comcast endured at "30 Rock," according to published reports. The company was founded by his father Ralph in 1963 and still likes to view itself as a family business.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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Feb 13, 2013 10:03PM

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