S&P Quasi-Endorses GE’s NBC Universal Plans (GE, CMCSA)

By Douglas A. McIntyre Updated Apr 28, 5:21AM EDT · Published Oct 5, 2:59PM EDT

Standard & Poor’s Ratings Services has reviewed the ramifications of reports about General Electric Co.’s (NYSE: GE) plans for NBC Universal. The ratings agency has said that a partial sale or IPO of NBC Universal would not adversely affect the AA+/Stable/A-1+ evaluation of GE’s “excellent business risk profile.” S&P had previously stated it would review the outlook or rating on GE if strategic shifts in all of GE’s portfolio of businesses jeopardized the S&P view.

GE owns 80% of NBC Universal and Vivendi S.A. controls the remaining 20%. Each November, Vivendi can offer GE notice of its intent to exercise its right to exit over the following year. This new data is on reports that GE and Comcast Corp. (NASDAQ: CMCSA) have been in discussions over forming a joint venture to take over NBC Universal ownership. This is also following indications from GE that an NBC Universal IPO is possible.

S&P noted that NBC Universal represented 12.6% of industrial segment operating income in the second quarter of 2009, but further noted that “any transaction involving NBC Universal would not likely reduce GE’s liquidity position.

More importantly, S&P said that, as of the second quarter, it believes that GE remained on track to meet previously stated assumptions for the current rating and outlook. Some of these were ending 2009 with at least $5 billion of cash at the industrial parent, and showing that industrial cash flow from operating activities that is lower than 2008, but still at least $14 billion and with discretionary cash flow after dividends of at least $2 billion.

S&P stopped short of telling GE to proceed with the deal, but this is a signal from at least one independent ratings agency that a deal here involving NBC Universal would likely not be deemed as anything like a material adverse event that would impact its ratings. This should also increase the chances in the public’s opinion that a deal of some sort about the NBC Universal unit is more likely.

JON C. OGG
OCTOBER 5, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.