Comcast in Deal Talks with NBC Universal

Comcast, the nation's largest cable operator with almost 25 million subscribers, has been looking to increase its content holdings for several years. In NBC Universal it would get its hands on not only a big broadcast network and movie studio, but also several powerful cable channels, including USA, Syfy, CNBC, MSNBC and Bravo.

NBC parent General Electric has often denied that it is interested in selling its entertainment holdings. Of course, if history is any guide, Comcast doesn't necessarily wait for an invitation before making a play. Five years ago it made an unsuccessful run to buy Walt Disney Co. for $54 billion.

The price tag for NBC Universal would be substantially less than that. A recent analyst report from J.P. Morgan analyst Stephen Tusa valued NBC Universal at $30 billion to $35 billion. However, such a deal would likely be very complex because there would be huge tax implications for NBC Universal parent General Electric, which first bought NBC in 1986 for $6.5 billion.

That is still a pretty steep price tag for Comcast to swallow. The cable giant has a market cap of $48 billion and about $4 billion in cash so if it were to buy all of NBC Universal, it would be a highly leveraged transaction.

Speculation that GE may be looking to unload NBC Universal has heated up as of late in part because the French conglomerate Vivendi, which holds a 20% stake in the entertainment unit, may look to unload its interest before the end of the year. There have been questions raised as to whether GE--which has first dibs on the Vivendi interest -- could muster the $4 billion - $5 billion needed to buy back the stake or whether another company such as cash-rich Time Warner or Comcast would step in and buy it.