The Joint Venture between NBC Universal and Comcast - Coursework Example

The Joint Venture between NBC Universal and Comcast General Electric Company and Comcast Corporation agreed for a joint venture between NBC Universal and Comcast on a valuation of about $30 billion. Comcast will own 51% of the joint venture and General Electric will own 49%. Comcast Corporation is one of the country's leading suppliers of leisure, news and communication products and services. NBC Universal is a global media company in the production and advertising of entertainment and information. The joint venture will combine the United States biggest cable broadband provider in Comcast with the programming domain of NBC Universal. The Federal Trade Commission, concerned with a possible monopoly situation, has placed conditions on the joint venture. General Electric will supply all of NBC Universal assets to the joint venture, valued at $30 billon, less about $9 billion in debt, and the joint venture will be managed by Comcast (Event Brief). Comcast will add its cable channels, regional sports networks, and two entertainment Internet sites, Fandango and Daily Candy valued at $7.25 billion and with adjustments, Comcast will also invest approximately $6.5 billion in cash to the deal (Event Brief). This joint venture will allow Comcast to control the video content provided by NBC Universal in their cable and Internet systems. Comcast is engaged in the development and operation of cable, Internet, and telephony systems and the company has 23.8 million cable consumers, 15.7 million broadband Internet consumers, and 7.4 million Comcast telephone customers (Comcast and GE to Create Leading Entertainment Company). Comcast's networks comprises E! Entertainment Television, Style Network, Golf Channel, VERSUS, G4, PBS KIDS Sprout, TV One, ten sports networks and a majority stake in Comcast-Spectacor, who posse the Philadelphia Flyers, the Philadelphia 76ers and two prominent multipurpose sports stadiums in Philadelphia (Comcast and GE to Create Leading Entertainment Company). NBC Universal has possession of and manages a collection of information and entertainment networks, a movie company 4,000 films, television production operations with 3000 titles, and the Universal Studios theme parks (Comcast and GE to Create Leading Entertainment Company). When General Electric acquired NBC Universal, it had a broadcast network with one revenue source. Eventually NBC Universal developed a cable unit with CNBC, MSNBC, USA, Bravo, and Oxygen that now provides 78% of cash flow to the company (Event Brief). The new joint venture of Comcast and NBC Universal would bring together the major delivery capacity of Comcast in broadband cable, regional sports outlets with the exceptional content production and supply resources of NBC Universal (Event Brief). The joint venture would immediately create a corporation that would be the biggest in the business. The joint corporation would provide services to 23% of American pay-TV households, 14% of cable programming, operate network-owned television stations that reach 27% of homes, posses a Hollywood film studio, amusement parks, and sports arenas (Hatch, David). This combined entity could have a significant influence on pricing and availability of content delivery by the competition. An economic study of the joint venture provided by the American Cable Association indicates that the combination of Comcast Corporation and NBC Universal would increase expenditure to customers by $2.4 billion more than nine years because of increased fees for pay television service content ("ACA: Comcast-NBCU Deal Will Cost Consumers $2.4B."). The new venture would increase costs because of the vertical and horizontal integration of assets. The vertical integration of NBC Universal programming strengths with Comcast delivery strengths and the horizontal integration occurs between NBC Universal programming resources and Comcast’s programming resources ("ACA: Comcast-NBCU Deal Will Cost Consumers $2.4B."). The vertical and horizontal integration created by the joint venture could produce a monopoly environment in the industry. The alliance of Comcast cable and NBC Universal has some opponents of corporate mergers of this magnitude concerned. Opponents are concerned that Comcast could exploit its new position in the marketplace. Opponents do not want one enormous corporation to control the creation and delivery of content that customers watch. The Justice Department and the Federal Trade Commission wanted to prevent a monopoly situation with Comcast and its cable activities. The Federal regulators sought to make certain that Comcast, through its power over NBC Universal's video content could not prevent their online video competition from having access or charging exuberant fees for the video content. The regulatory rules put in place required Comcast and NBC Universal make available video content to Internet video suppliers Apple TV, Netflix, YouTube, and other companies under certain limitations (Reardon, M). The joint venture is expected to present content to an Internet supplier if that supplier already has one of NBC Universal competitors to provide comparable content, and even then, NBC Universal is only expected to provide content under comparable conditions that are already being supplied by a NBC Universal opponent (Reardon, M). The content access applies to Comcast and NBC Universal regional sports networks, television stations, and the USA and CNBC networks (Eggerton, J). The concern is Comcast could have the capability and incentive to give competitor’s a less-prominent position in its network systems. As an example, Bloomberg and other competitive news channels are expected to be grouped in similar cable positions as CNBC or MSNBC programming (Eggerton, J). Comcast and NBC Universal are expected to create a competitive environment with Internet video. The joint venture will augment their cable programming with local market news coverage, increase children’s video content, expand Spanish-speaking programming, supply broadband Internet services to low-income families, supply broadband Internet to education facilities, libraries, and other public benefits (FCC Grants Approval of Comcast-NBCU Transaction). The Federal Trade Commission has imposed regulations that Comcast provide underserved communities with Internet broadband access at a fair price without restrictions or bundling with other services. Comcast will be expected to provide nationwide stand-alone broadband service for $49.95 a month (Reardon, M). General Electric Company and Comcast Corporation are joining forces with NBC Universal and Comcast. The combined assets are valued at approximately $30 billion. Comcast will own 51% and manage the combined entity and General Electric will control 49%. The joint venture between Comcast and NBC Universal will mix Comcast's cable systems and regional sports networks with NBC Universal's cable and television stations. The joint venture will combine the United States biggest cable broadband provider in Comcast with the programming domain of NBC Universal. Opponents of the joint venture are concerned with possible monopoly powers by Comcast and the Federal Trade Commission has implemented conditions on the joint venture. References "ACA: Comcast-NBCU Deal Will Cost Consumers $2.4B." Telecommunications Reports 76.23 (2010): 12-13. Business Source Premier. EBSCO. Web. 8 Apr. 2011. "Comcast and GE to Create Leading Entertainment Company." Comcast Official Site | Deals on High-Speed Internet, Cable and Phone Service. N.p., 3 Dec. 2009. Web. 9 Apr. 2011. . Eggerton, J. "NBC Universal: Conditionally Comcastic." Multichannel News 32.49 (2011): 4. Business Source Premier. EBSCO. Web. 8 Apr. 2011. "Event Brief of Comcast Corporation Conference Call to Discuss NBC Joint Venture with General Electric - Final." Fair Disclosure Wire (Quarterly Earnings Reports) (n.d.): Newspaper Source Plus. EBSCO. Web. 8 Apr. 2011. "FCC Grants Approval of Comcast-NBCU Transaction." Federal Comunications Commission. N.p., 18 Jan. 2001. Web. 7 Apr. 2011. . Hatch, David. "NBC and Comcast: Deal or No Deal?." National Journal (2010): 9. Academic Search Premier. EBSCO. Web. 8 Apr. 2011. Reardon, M. "Regulators approve Comcast-NBC Universal deal | Signal Strength - CNET News." Technology News - CNET News. N.p., 18 Jan. 2011. Web. 8 Apr. 2011. . Read More