NBC Universal, a subsidiary of
) - the largest cable MSO in the U.S. - recently announced
plans to sell its 15.8% stake in A&E Television Networks for
A&E Television Networks is known for its biographies and
documentary shows including popular stations like The History
Channel and The Biography Channel.
A&E Television Networks was primarily by a three-way
Walt Disney Co.
), NBC Universal and Hearst Corp. With NBC Universal selling its
stake, the other two co-owners will each get a 50% share of A&E
Most industry analysts believe that the cash received from the
sale of A&E stake will be used by Comcast to purchase the
remaining 49% stake of NBC Universal from
General Electric Co.
In January 2011, Comcast bought a 51% stake in NBC Universal
from General Electric for a total consideration of $13.75 billion
(inclusive of cash and cable business contributed by Comcast). It
was then decided that General Electric will sell the remaining 41%
stake in NBC over the next seven years.
The total assets of NBC Universal were valued at nearly $30
billion in December 2009, when Comcast struck a deal with the
company. Considering the steep valuation, Comcast requires huge
cash to complete the transaction going forward. With just over $2
billion in cash currently on its books, divesting the A&E stake
will significantly improve Comcast's cash position, thereby helping
the company to meet its required target.
Currently, we are maintaining our long-term Neutral
recommendation on Comcast. Comcast has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
COMCAST CORP A (CMCSA): Free Stock Analysis
DISNEY WALT (DIS): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
To read this article on Zacks.com click here.