Investor Presentation Comcast-NBCU
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8/14/2019 Investor Presentation Comcast-NBCU
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Creatin A Premier Media and Entertainment Com an
able
annels
dcast
Ch
Broa
tal
Digi
.com
ilm
ParksF
December 3, 2009
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Creatin A Premier Media and Entertainment Com an
able
annels
dcast
Ch
Broa
tal
Digi
.com
ilm
ParksF
3
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Compelling Strategic Opportunity
Brings together outstanding content creation and distribution capabilities
Comcast creates Comcast Entertainment Group to hold its 51% interest ina leading media and entertainment company
Combines NBCU, a high quality diversified media company, with Comcastprogramming assets, increasing our scale and capabilities
Cable channels represent 82% of the new joint ventures OCF and drive its profitability
Builds on multi-platform reach to expand entertainment options forconsumers and growth opportunities for Comcast
Accelerates innovation and new models for content deliver and distribution
Combines experienced management teams with proven track records ofintegrating, operating and growing cable and content assets
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Builds Shareholder Value
Attractive transaction structure
Maintains our balance sheet strength while providing 51% ownership and control ofextensive content businesses
Unique structure provides performance incentives and significant value creation opportunity Under the redemption mechanism, Comcast shares in an additional 50% of the value
creation above the initial equity value
Strong financial returns even assuming minimal synergies
Structure provides meaningful tax benefits to Comcast and reduces net cash investment
Any potential synergies further enhance returns
Clear future capital allocation strategy
The new joint venture represents a vehicle to invest in cable channels, a fast-growing partof our business and one of the most compelling areas in media
to return capital to shareholders
Increasing Comcasts planned annual dividend 40% to $0.378 per share, with firstpayment effective January 2010
Repurchasing $3.6 billion of Comcast stock over the next 36 months
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Transaction SummaryComcast and GE are forming a content joint venture initially owned
Transaction Steps Transaction Structure
NBC Universal will borrow $9.1 billion from third party
lenders and distribute the proceeds to GE
Fully committed debt financing with expected BBB+/Baa2 ratingCash
~$6.5Bn
Cash$9.1Bn
new joint venture, valued at $30Bn, subject to $9.1billion of debt
Comcast will contribute its cable channels, regional
ComcastContent Assets
Valued at$7.25Bn
NBCU AssetsValued at $30Bn
and Daily Candy), together valued at $7.25 billion
Subject to certain adjustments, Comcast will pay GEapproximately $6.5 billion in cash to achieve 51%controllin interest
NewJointVentureComcast:51% GE:49%
($ in Billions)
Structure provides meaningful tax benefits to Comcast
Regulatory approval and closing expected in 9 to12months
.
Debt ($9.1)NBC Universal Equity Value $20.9Value of Comcast Content $7.3Initial Equity Value* $28.2
GE to purchase Vivendis interest in NBC Universal
6* Subject to adjustment based on the amount of cash, if any, in the venture at closing.
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Transaction Summary
Meets our strate ic and financial ob ectives and creates a defined ath
The new joint venture will be conservatively capitalized with initial Debt/OCF of less than 3.0x
to achieve 100% control1
Business has high FCF conversion that will drive substantial de-levering
The new joint venture is expected to self-finance future equity redemptions by GE
Strong projected FCF and debt capacity fund the redemption of remaining 49% interest over 7 years
Beginning shortly after closing, the new joint venture is expected to maintain maximum leverage of 2.75x and remaininvestment grade
Redemption price is based on the fully-distributed public market value at time of redemption,subject to certain adjustments tied to the ventures value.
Comcasts obligation to fund GE redemptions is capped at $5.75 billion
If any borrowings by the venture to fund GEs redemptions would result in the ventures leverage ratio exceeding 2.75x orthe venture losing investment grade status, Comcast will provide a backstop to a maximum amount of $5.75 billion
. .
2nd redemption right for GE at year 7 of remaining ownership: $2.875 billion backstop plus any unused amount from1st redemption to a maximum of $5.75 billion
Comcast receives a performance incentive as the value of the new joint venture increases
Under the redemption price mechanism, Comcast shares in 50% of the value creation above the initial equity value of$28.2 billion
7Refer to Appendix fordetailed description
(1) GE may retain a preferred interest in the venture in certain circumstances.
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Transaction Summary
Immediately accretive to:
Free Cash Flow per share Earnings per share
- -performance incentive
Under the redemption mechanism, Comcast shares in 50% of the value creation above theinitial equity value of $28.2 billion
Expected double-digit IRRs substantially exceed our WACC and generatemeaningful shareholder value, even assuming:
Minimal cost benefits (
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Maintains Balance Sheet Strength and Investment Grade RatingIllustrative 2010 estimated pro forma financial metrics
omcasEx-Programming New JV PF Comcast PF Comcast Mix %
Revenue2010 Estimate:
($Bn)
evenue . . .
OCF $13.6 $3.0 $16.5
Cap Ex $4.8 $0.4 $5.23
1%Broadcast
11%
CableChannels
14%
CableDistribution
. . .
FCF3
$4.3 $1.4 $5.7
4OCF
Debt / OCF 2.5x 3.0x 2.6x
Note: 2010 figures are for illustrative purposes only and do not represent guidance.
CableChannels
17%
CableDistribution
Figures are preliminary and do not include all GAAP purchase accounting adjustments(1) Comcast includes Cable, Corp & Other (CIM and Spectacor) and excludes contributed assets (Programming assets,
RSNs, Fandango and Daily Candy).(2) PF Comcast revenue is net of inter-company eliminations.(3) Interest expense and FCF are pro forma as if closing occurred on 1/1/2010.(4) Estimated debt at closing. Excludes borrowings for transaction fees and debt guaranteed by GE.
80%
Cable and Cable Channels are 97% of OCF and Drive Profitability and FCF Growth
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Maintains Commitment to Return Capital to Shareholders
omcast1Ex-Programming
Parks
Strong FCF Generation
New Joint Venture
Strong FCF + Debt Capacity
Films8%
Broadcast
14%
1%
Free cash flow is retained to fund any GEredem tion of its remainin 49% interest2
Expected to Fund 100%Ownership
Increased Return of Capital toShareholders
Increasing Comcasts planned annual dividend40% to $0.378 er share with first a ment
Debt capacity based on maximum leverageof 2.75x and maintaining investment graderating
Comcasts fundin obli ation is ca ed at
effective January 2010
Expect to further grow the dividend in line withgrowth in the business
Intend to complete share repurchase plan to
$5.75 billion over 7 year period Meaningful tax benefits to Comcast
buy back $3.6 billion of Comcast stock overnext 36 months
Dividend and share repurchase payout ratio inexcess of 50% of LTM Free Cash Flow
Continue to Build Long-Term Shareholder Value
10
(1) Comcast includes Cable and Corp & Other and excludes contributed assets (Programming assets, RSNs, Fandango and Daily Candy).(2) GE may retain a preferred interest in the venture in certain circumstances.
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Balanced and Disciplined Financial Strategy
Comcasts Capital Allocation Principles Remain in Place
Invest in the business to support profitable growth and generate attractive returns
Disciplined acquisition and investment strategy
Maintain the strength of our balance sheet and investment grade profile
Return capital directly to shareholders
Committed to Build Shareholder Value This transaction has a strong financial profile
Immediately accretive with strong returns
Maintains balance sheet stren th and investment rade rofile
Maintains capacity to accelerate return of capital to shareholders
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NBC: a global brand with an iconic legacy (News, Sports, Primetime)
-
Broadcast2009E Revenue
TV stations: strong local presence with deep ad sales relationships TV production studio supplies owned and 3rd party networks with a growing
library of 3,000+ titles
Broadcast
38%
Cable
Channels
2009E OCF
Broadcast networkreaches 100% ofUS households
TV productionstudio + library:
3,000+ titles
#2 Spanishcontent producer
loballBroadcast
10%Cable
Channels
NBCs 10 O+Oscover 27% of US
TV HH16 O+Os
78%
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Complex businessmore opportunity than downside
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A Global and Iconic Brand
Tonight Show5 hosts, 5 decades of leadership Late Night3 hosts, 3 decades of leadership Saturday Night Live a cultural institution for 35 years
Entertainment
Nightly News #1 for 13 straight years
Meet the Press #1 for 12 straight years Local News #1 or #2 in 9 out of 10 DMAs Success at NBC creates significant value in MSNBC
News
Sports
Reach of 1 network spot on Same reach across 9 spots on
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One of two major international theme park brands
Theme Parks2009E Revenue
Broadcast a e, n us ry- ea ng marg ns
International growth opportunity with zero-capital / management fee model
38%
Cable
Channels
Parks3%
(1) (2) (3)
Strong Brands2009E OCF
31%
Men in Black
Shrek
Innovative New AttractionsHarr Potter
Broadcast
10%Cable
Channels
The SimpsonsThe Mummy
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(1) NBCU owns 100% of Universal Studios Hollywood.(2) 50/50 JV with Blackstone formed in September 2008.(3) NBCU receives licensing/management fees for Universal Studios Japan.
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One of six major Hollywood studios
Film2009E Revenue
Cable
Channels ov es ave s rong, sus a ne an g o a appea
Extensive library includes 4,000+ movie titles
Significant international distribution capability
Broadcast
38%
Cable
ChannelsBroadcast
31%
2009E OCF
4,000+ film library
with classic titles
Broad appeal for global audience
Strong franchisesBourne
Cable
Channels
78%
Meet the Parents
roa cas
10%
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Cable Channels Deliver Majority of Value
One of the most valuable businesses in the media sector
revenue streams:
Affiliate fees from cable, satellite and telco providers have been growing onaverage per year
Advertising sales have increased on average 7% per year1 due toincreased ratings and attractive audience delivery
Much of their own content is produced internally, adding to coststability and ratings growth
NBCU owns 5 cable channels that each generate in excess of$200 million in annual OCF
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(1) Source: 2004-2009 per Kagan Research.
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A Valuable Portfolio of Profitable Cable Channels
Outstanding growth and profitability with industry-leading margins
2004-2009 CAGR: +16.2%
$2,190
NBCU Cable Channels Operating Cash Flow ($MM)
$1,280
$1,560
,
$1,035,
2004 2007 2008 2009E20062005
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A Valuable Portfolio of Profitable Cable ChannelsNBCUs successful formula drives industry-leading ratings
#1 in primetime ratings for 13 consecutive quarters
Characters Welcome brand has led to unprecedented original success:
Monk, Burn Notice, In Plain Site and now White Collar
#1 business news channel since 1989
Global brand reaching 340MM HH around the world
Top #10 in ratings A25-54 and A18-49 year-to-date
Hit original series: Warehouse 13, Eureka, Ghost Hunters
23 international channels in 2010
#2 cable news channel (primetime ratings A25-54), regularly beating CNN Successful The Place for Politics ositionin
Ratings doubled over the last 4 years
#2 fastest growing top 20 cable entertainment network A18-49 over the past 2 years
Successful positioning as the pop culture innovator
Dramatic improvement since acquisition
Top 25 in ratings for women 18-49
,
First successes: Royal Pains, Psych
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Combines Experienced Management Teams and Creative Talent
TVEntertainment
JeffGaspin
ComcastProgramming
JeffShellComcastSportsGroup
JonLitner
MSNBC
PhilGriffin
NBCU UniversalPicturesAdam Fo elson
TedHarbert
Style
SalaamColemanSmith
SandyWax
DickEbersol
NBCNews/MSNBC
Steve Ca us
RonMeyer
e uc er
NBCUCableEntertainment
andUniversal
Cable
UniversalPictures
DonnaLangley
GolfChannel
PageThomson
ro uc ons
BonnieHammer
G4
NealTilesNBCUWomenand
LifestyleEntertainment
UniversalPictures
+UniversalStudios
Versus
JamieDavis
UniversalParksandResorts
TomWilliams
Networks
LaurenZalaznick
CNBC
MarkHoffman
RickFinkelstein
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Business Opportunities
Valuable portfolio of profitable cable channels
Achieves scale for Comcasts cable channels rovidin o ortunit for margin expansion
Combination of established and emerging cable channels plus broadcast
Valuable platform to reach key demographics
Entertainment, women, sports and news
Combination of content and distribution creates consumer choicean r ves va ue
Unrivalled asset mix, defined strategy and attractive transaction
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Cable ChannelsThe Foundation for an Attractive Asset Mix
New Joint Venture
2009ERevenue
NBCU
2009ERevenue
Cable
Channels
31%
Broadcast
38%
Film
28%
Broadcast
33%
Film
25%
CableChannels
31%
Parks
3%
CableChannels
40%Parks
3%
2009EOCFParks
5%2009EOCF
Broadcast
10%
CableChannels
78%
Parks
6%
Film
6%
Broadcast
8%
CableChannels
82%
Parks
Film
5%
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Cable Channels Drive Growth
2004-2009 CAGR: +14.9%
$2,762
$2,491
$1 953 $2,190
NBCU
Comcast
$2,000
$1,657
-$1,381$1,524
(1)
$1,035 $1,103$1,280
$1,560
CAGR:+16.2%
2004-09
2006 2007 2008 2009E
CAGR:+10.6%
20052004
(1) Operating cash flow of consolidated Comcast cable channels excludes SNY, PBS Kids Sprout, TVOne, FEARNet.
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A Valuable Portfolio of Profitable Cable ChannelsSubscribers by Network(1) NBCUComcast
Growth Opportunities:
Cross promote and strengthen emerging97
97
99
Strong platforms for advertisers
Ex and domestic and international92
93
distribution
Increase exposure to new platforms66
75
34
35
64
Minority Interests40%
22
30
32
33% ~16%
~33%
8%
16
(1) November 2009 Nielsen Households in MM except Universal, FearNet, Sleuth, and Sprout which are 2009E subscribers in millions.
25%
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A Valuable Portfolio of Profitable Cable Channels
(1)
2009E
CompanyOCF($Bn)
Cable Channels% of Total OCF
(2)
$3.8 50%
(3)
New NBCU Joint Venture
$2.8 82%
(4)
(5)
$2.8 39%
$1.9 38%
(1) Total OCF excludes corporate overhead.(2) Disney excludes Equity in Affiliates. 2009 data reflects the fiscal year ending September 30, 2009.(3) The new joint ventures estimated OCF excludes Equity in Affiliates and non-recurring items. Cable channels as a percentage of the total new joint ventures OCF.(4) Time Warner excludes HBO financial information based on Kagan Research.
27
(5) News Corp 2009 data reflects the fiscal year ending June 30, 2009.
Source: Company Filings, Wall Street Research
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Establishes Strong Platforms
a large audience across cable and broadcastEntertainment 1
reaches the most women on cable TV and online sitesWomen
reaches across national broadcast, cable and regional sportsSports
News
LocalNews
xtens ve c o ces or a vert sers an consumers
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(1) For TV: Nielsen Unduplicated Cume Audience (Women 18-49), September 2009. For online: Nielsen NetView Monthly Unique Audience,September 2009.
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A Leading Provider of Content Online
A Top 10 online property with 82 million monthly unique visitors
A leadin su lier of rofessionall roduced online content:
#3 News #3 Entertainment#1 Women/Lifestyle #7 Sports
Eonline.com
Fancast.comFandango.com
MSNBC.com
CNBC.com
Todayshow.com
iVillage.com
Style.com
NBC Sports
ComcastsportsnetVersus.com
Accesshollywood
Hulu
Fancast
25%
Popsugar.com
Oxygen.com
Bravo.com
DailyCandy.com
Exercise TV
Golfnow.com
Source: MediaMetrix, October 2009 (Unduplicated Audience).Note: Rankings are based on companies that focus primarily on the production and distribution of professional content online and exclude portals and ad networks that primarily
aggregate content and audiences from 3rd parties. Comcasts new joint venture includes weather.com (25% ownership), but excludes msnbc.com (50% ownership) and Hulu(27% ownership). Comcast.net and Fancast are excluded, as they are not being contributed to the joint venture.
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GrowthOpportunitiesfortheCombination
Stren then Video On Hel launch and row Cross- romotion between
BenefitsContent
BenefitsContent
Benefits
Distribution
Demand and On Demand
Online offerings
Accelerate interactive
cable channels
Use new technologiessuch as Video On Demand,
-
channels and NBC
Programming from NBC,Universal Studios and
advanced advertising
Offer tent-pole events and
use libraries to create new
On Demand Online
Protect copyrights, fight
piracy, create new
channels
Gain scale for advertising,
digital and cost structure, .
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Shareholder Value Creation
eets ur cqu s t on an nvestment r ter a anMaximizes Long-Term Shareholder Value
Compelling strategic rationale
Extends the size and capabilities of cable, content and Internet businesses
Pro forma asset mix positions the company to continue to innovate and grow
Significant capacity to execute
Combines strong and experienced management teams with proven track record ofn egra ng, opera ng an grow ng ca e an con en asse s
Strong financial returns and financial profile
Immediatel accretive with stron returns
Maintains balance sheet strength and investment grade profile
Maintains capacity to accelerate return of capital to shareholders
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Duringthesixmonthperiodstartingonthe3yearanniversaryofclosing(1st redemptionright),GEcan
Important Transaction Points
.
Duringthesixmonthperiodstartingonthe7th anniversaryofclosing(2nd redemptionright),GEcanelecttocausethenewjointventuretoredeemGEsremaining interest1.
Thenewjoint venturesredemptionofGEsequityinterestissupportedbythenewjointventuresstrongFCFgenerationanddebtcapacity.
GE
Redemption
Rights IfanyborrowingsbythejointventuretofundGEsredemptionswouldresultintheventuresleverageratio
exceeding2.75xortheventurelosinginvestmentgradestatus,Comcastwillprovideabackstoptoa
maximumamount
of
$5.75
billion:
up
to
$2.875
billion
for
1st redemption
right,
and
up
to
an
additional
$2.875billion(plusanyunusedamountfrom1st redemption)forthe2nd redemptionright.
Comcast
Purchase
Rights
Ifthe1st GEredemptionrightisexercised,ComcastcanelecttosimultaneouslybuytheremainderofGEsinterest1.
IfGEs1st redemptionrightisnotexercisedduringthesixmonthperiodstartingonthe5th anniversaryof
closing,
Comcast
can
elect
to
acquire
50%
of
GEs
interest. th 1 .
Afterapproximatelythe3yearanniversaryofclosing,GEcanengageinpublicandprivatesales(includingcausinganIPO),subjecttoComcastsrightoffirstofferorsimilarpurchaserightsandcertainother
Transfer
Rights
m a ons.
Afterapproximately
the
4th anniversary
of
closing,
Comcast
has
the
right
to
sell
its
entire
stake,
subject
to
tagalong/dragalongrights.
Afterthe4th anniversaryofclosing,Comcastispermittedtosellaportionofitsstakeaslongasitmaintainscontrolandisthelargestshareholderinthenewjointventure.
ComcastcancauseanIPOtooccuraftertheclosingofthe1st GEredemptionright,ifexercised,orafterthe4th anniversaryofthedealclosingifnotexercised.
33(1) GE may retain a preferred interest in certain circumstances.
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Valuationbasedon20%premiumtomarket
Illustrative Redemption Calculation
basedmultiples
at
the
time
of
redemption
Excessvalueoverinitialequityvalueissplit
50%50%betweenComcastandGE
u c
qu y
a ue
20% EquityPremium
Redemptionvalue
of
GE
stake
expected
to
be
fundedprimarilythroughfreecashflowand
leveragecapacityatthenewjointventure
AdjustedEquityValue
Ifanyborrowingsbythejointventuretofund
GEsredemptionswouldresultintheventures
leverageratio
exceeding
2.75x
or
the
venture
$28.2Billion
ExcessValue
os ng nves men gra es a us, omcas w
provideabackstoptoamaximumamountof
$5.75billion
1st redemptionrightatyear3.5:maximum
50%EquityInvestmentSplit
SharedPortionofExcessValuebackstopof$2.875billion
2nd redemptionrightatyear7:maximum
backstopof$2.875billionplusanyunused
backstopfrom1st redemption
AdjustedEquityValue
SharedPortionofExcessValue
EquityValueforRedemption
.
billion
34
R ili i f N GAAP Fi i l
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Reconciliation of Non-GAAP FinancialMeasures to GAAP
Comcast1Ex-Programming
New JV PFComcast
Estimated Net Cash Provided by Operating Activities 9.2 2.0 11.2
Less:Estimated Capital Expenditures and Cash Paid forIntangible Assets
$(5.4) $(0.4) $(5.8)
Estimated Adjustments for Payment of Tax onNon-operating Items and Other Distributions
$0.1 $(0.2) $(0.1)
Adjustment to Exclude the Estimated Impact of $0.4 $0.0 $0.4
Estimated Free Cash Flow $4.3 $1.4 $5.7
, , , .
35