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Rating Action:

Moody's Assigns Baa2 Senior Unsecured Ratings to NBC Universal Proposed New Bank Debt; Outlook Stable

03 Dec 2009

Approximately $9.9 billion of debt rated.

New York, December 03, 2009 -- Moody's Investors Service assigned Baa2 senior unsecured ratings to NBC Universal, Inc.'s new $750 million 3-year revolving credit facility, $6.1 billion 364-day term loan / capital markets bridge and $3.0 billion 3-year amortizing term loan facility. Proceeds from the debt issuance will be used to pay General Electric Company ("GE") (Aa2 senior unsecured rating) for the contribution of its NBC Universal ("NBCU") interest to a planned combination of NBCU and Comcast Corporation's ("Comcast") (Baa1 senior unsecured rating) cable networks, where the combined company ("NewCo") will be controlled by Comcast. The outlook is stable.

The new rating assignments are based upon the assumption that Newco will be a stand-alone obligor (no contractual guarantees from either Comcast or GE) under the proposed senior unsecured bank facilities. The ratings are based on the combined entity's iconic brands (USA, NBC, Universal, and many others), large portfolio of cable networks, significant scale (2009 pro forma revenues of $17.3 billion) and broad geographic reach of the NBC network. The rating is supported by strong and consistent cash flow generation, and a governance-based limitation on the amount of incremental debt NewCo can incur (2.75x based on management's calculation of debt-to-EBITDA leverage) which we believe is prudently moderate. Moody's expects that leverage will dip to as low as around 1.5x leading up to the GE buyout windows, at which time debt will be reloaded to the 2.75x ceiling, and average leverage will remain at about 3x thereafter (including Moody's standard adjustments and guarantees). "We anticipate that operating performance will begin to improve as economic pressures subside over the next several years and as NBC lowers its longer term programming costs and improves its profitability" stated Neil Begley, a Senior Vice President at Moody's Investor Service..

In Moody's view the primary risk to debt investors would be a material drop in EBITDA occurring (as a result of a significant pull-back in advertising spending or a reduction in carriage fees associated with contract renewals) just following a debt recapitalization in 2014 for a partial GE buyout. However, we believe that the probability of a repeat of the 2009 advertising climate or something worse for NewCo right at that point in time is low, and the company would still likely generate free cash flows. Other risks include refinancing risk associated with the capital markets bridge facility, and given the 100% level of variable rate debt, there is longer term interest rate risk until the bank debt is refinanced with longer term fixed rate debt, which we expect to occur at or around the time of transaction's close.

Transaction Overview:

The proposed transaction contemplates the contribution of GE's NBCU business (valued at about $30 billion) and Comcast's content business (valued at around $7 billion) to a newly formed entity ("NewCo"). At closing (which is expected to occur in about 12 months from signing), NewCo will incur debt of approximately $9.23 billion of which GE will receive $9.1 billion in addition to $7.1 billion of cash from Comcast (composed of cash on hand, availability under existing credit facilities, new financing and a portion of free cash flow generated at Newco between signing and closing) such that NewCo is owned 51% by Comcast and 49% by GE (following GE's take out of Vivendi's 20% stake).

During a 6-month period starting at 3.5 years after closing, GE has rights to cause NewCo and Comcast to redeem half of its remaining 49% NewCo stake, with the remaining portion exercisable during a 6 month period starting 7 years after closing. NewCo is expected to incur additional debt to meet GE's puts via proceeds from a releveraging of NewCo to levels similar to the level at the initial closing. To the extent that the releveraging of NewCo (to about 2.75x funded Debt/EBITDA excluding Moody's adjustments) does not produce proceeds sufficient to meet the GE put, Comcast is required to meet the additional exposure to the put with cash or stock. Comcast's aggregate exposure to these redemption rights is capped at a total of $5.75 billion for the two puts. Additionally, Comcast has the rights to call GE's stake in NewCo for cash during those windows as well.

GE will maintain consent rights on key decisions including M&A, dividends and leverage > 2.75x (funded debt / EBITDA excluding Moody's standard adjustments).

This is the first time Moody's has assigned public ratings to NBC Universal, Inc.

For the assignment of NewCo's Baa2 senior unsecured long term debt ratings, Moody's has used its methodology for the Large Global Diversified Media Industry, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy & Methodologies directory.

NewCo, with its headquarters in New York, New York, at closing will be a jointly owned company by Comcast and GE that is a diversified media content company comprised of cable and broadcast networks, broadcast television stations, a film studio and theme parks. NewCo's pro forma revenues are expected to exceed $17 billion in fiscal 2009.

New York
Neil Begley
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Alexandra S. Parker
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Assigns Baa2 Senior Unsecured Ratings to NBC Universal Proposed New Bank Debt; Outlook Stable
No Related Data.
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