A Tough Nut to Crack: Telemundo’s Valuation in the GE-Comcast Deal
While the value of the overall transaction was disclosed as close to $30 billion (excluding $7 billion in assets Comcast is providing to the joint venture), neither GE nor Comcast revealed the valuation of Telemundo.
Portada estimates the Telemundo valuation underlying last weeks Comcast –NBC Universal deal to lie at between $1 billion and $1. 5 billion.
Here is the reasoning. Comcast said the deal values NBC Universal at 10 times forecast 2010 operating cash flow of $3 billion. In addition, according to Comcast, the NBC Universal venture's cable networks (including Telemundo’s cable network Mun2) will generate $2.19 billion in operating cash flow in 2009. At a multiple of say 11.5 times (higher than the average of 10 due to the higher growth rate of these assets), that would put NBCU's collection of cable networks including USA, Bravo, SyFy, MSNBC and CNBC at $25.2 billion.
This means Comcast is getting the NBC broadcast network, which includes Telemundo, its affiliate stations, theme parks and Universal Pictures for $4.8 billion. Assuming that Universal Pictures and all other NBC non Hispanic network assets and theme parks amount to 75% of the $4.8 billion, we get a $1.2 billion valuation for Telemundo, which may be increased a bit if we include Mun2.
(In 2001 NBC paid $1.98 billion in cash and stock to acquire the Telemundo network from Sony and Liberty Media, Telemundo’s owners at the time. At the time the U.S economy was not in a recession like it is now. In addition, valuation multiples for broadcasting companies were considerable higher).
For a company overview of CNBC Universal click here.
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