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Monday, November 13, 2006

KKR: No Vivendi, How About Comcast? (CMCSA)(V)

The large private equity firm Kohlberg Kravis approached French entertainment and telecom company Vivendi with a proposal to take it private. The number on the table was over $50 billion. The deal did not work out and talks broke off.

Clearly, KKR is looking at companies that are in the business of syndicating and distributing content. Perhaps they need look no further than Comcast, which has a market capitalization of $83 billion and is the largest cable company in the United States. Comcast also owns a large web portal,, and several cable channels including the E!Entertainment Network.

Another advantage to a possible private equity deal at Comcast is that the company is controlled by the founding Roberts family. Founder Ralph Roberts still sits on the board and his son is the current chairman and CEO. The company has two tiers of shares which allow the Roberts family a 33% voting block. Rival cable company Cablevision has talked about going private. It is also controlled by its founding family.

Comcast’s cable network now passes over 46 million homes and has about 23 million subscribers. It sells these customers cable TV, broadband access and voice over IP phone service.

According to Morningstar, Comcast has investments about equal to it $30 billion in debt.

Cash from operations at Comcast over the last four quarters totals $5.6 billion.

KKR does not need to go to France. The can find a match with a profile similar to Vivendi’s and one which may be much better off. They also only have to talk to a father and a son.


Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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