Governing the NBCU joint venture

by Kenneth Klee, for The Deal, December 3, 2009.

The structure of the NBC Universal joint venture announced Thursday morning by General Electric Co. (NYSE:GE) and Comcast Corp. (NASDAQ:CMCSA) is a tribute to modern dealcraft. Resources are redeployed, capital is redirected, and myriad contingencies are anticipated. General Electric’s deal team has been boning up on alternative deal structures for at least a year now, and it shows.

But leave it to former NBCU chief Bob Wright to look past the elegant design and get to the heart of the challenge that awaits beyond regulatory review and closing. “It’s going to be a management challenge when one party is looking to grow and the other party is looking to get out,” says Wright, who nevertheless thinks the deal is good for both sides.

No kidding. Interests can be hard enough to align in a JV when both parties are looking to expand in a new field or reduce back-office costs or make common cause on some other front. This JV is a multiyear handoff of a complex bundle of assets in a fast-changing industry. Certainly GE wants to preserve and even increase value on its way out the door. The trick will be reconciling GE’s desire to take capital out with Comcast’s need to invest and act quickly on opportunities and threats that will surely arise…(continue reading)

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