Comcast to Sell Stake in A&E - Analyst Blog

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NBC Universal, a subsidiary of Comcast Corporation ( CMCSA ) - the largest cable MSO in the U.S. -  recently announced plans to sell its 15.8% stake in A&E Television Networks for $3.03 billion.

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 partnership involving Walt Disney Co. ( DIS ), 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 Network.


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. ( GE ).

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 Report
 
DISNEY WALT (DIS): Free Stock Analysis Report
 
GENL ELECTRIC (GE): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CMCSA , DIS , GE

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