A Comcast Corp. (CMCSA) acquisition of part or all of NBC Universal would fulfill the cable giant's push to expand in content, but it would likely come at a steep price and draw fire from the company's already disgruntled shareholders.

Even with Comcast's swift denial of a report that it has a deal to buy NBC Universal, shares of Comcast responded to the buzz by shedding as much as 7.3% Thursday as sources confirmed that the cable giant is in talks with General Electric Corp. (GE) about its entertainment conglomerate.

This comes as the investment community is embracing the view that the growth-by-acquisition strategy that has long dominated the media sector has not delivered for shareholders. Analysts agree that the prospect of a big acquisition is a chief concern for Comcast investors as the company's free cash flow piles up and its capital spending tails off.

"Comcast has de-levered its balance sheet instead of returning cash to shareholders, so they have some powder stored up, and they have pursued a couple of big acquisitions in the past," Cross Research analyst Bryan Kraft said. "There's a sense out there that the company won't be able to generate great economic returns from a deal like this."

At a recent investor conference, Comcast Chief Operating Officer Stephen Burke said it's unlikely the company would spend anything close to $50 billion on an acquisition or that it would use its stock as currency for a deal.

"We like where we are from a leverage point of view and would be uncomfortable if our leverage went higher from here," Burke said.

He also noted that 95% of Comcast's business mix is content distribution, while just 5% is content creation, and he said the company is interested in growing on the content side, particularly in cable TV content.

"We wouldn't be doing our job if we didn't figure out a way to get bigger" in the cable content business, Burke said then. "At our core, we believe content and distribution work well together."

Bernstein & Co. analyst Craig Moffett estimates the value of NBC Universal at about $21 billion to $23 billion, with the total value surpassing $30 billion with a premium. Entertainment Web site The Wrap reported Wednesday that Comcast had negotiated a deal to buy NBCU for $35 billion - a report Comcast said was inaccurate.

NBCU has become the subject of deal speculation as French conglomerate Vivendi SA (VIVEF) mulls possibilities for its 20% stake in the company. Each November, Vivendi has a window of opportunity to exercise a contractual option to force a sale of its stake to GE or to public investors, and many observers believe the company will act this year.

That could trigger a sale of NBCU if GE opts not to buy the remainder of the company. While NBCU's struggling broadcast network is viewed by many as a declining business, the company's stable of cable networks, like CNBC and USA Networks, are seen as attractive assets for their dual revenue streams of subscription and advertising.

Also attractive to Comcast would be NBCU's major stake in Hulu, the popular online video site formed by broadcasters. Moffett said the stake would give Comcast more control over the future of online TV at a time when the rise of digital video threatens the cable industry's lucrative business model.

However, the decline in Comcast share price Thursday - the stock recently dropped 5.9% to $15.88 - point to shareholder unease with an NBCU purchase.

Shareholders have long been leery of Chief Executive Brian Roberts and his family's control over the company. At its annual meeting last spring, a shareholder resolution to do away with the dual-share structure that keeps voting control with the family received strong support. While largely a symbolic gesture, such a vote puts pressure on Comcast to be more shareholder-friendly.

Any deal likely would face severe regulatory challenges that could make it "exceptionally difficult to create value in such as transaction," Moffett added. It also "would play to investors' worst fears about Comcast's capital allocation."

In their new book, "The Curse of the Mogul: What's Wrong with the World's Leading Media Companies," authors Jonathan Knee, Bruce Greenwald and Ava Seave show that major media conglomerates have written down $200 billion in assets since 2000 after "relentlessly overpaying for acquisitions" and delivering subpar returns to investors.

For its part, Comcast shares have lost a fifth of their value so far this decade. In 2004, it made an unsolicited bid for the Walt Disney Co. (DIS), only to back off as the entertainment giant resisted a sale.

Before that, it purchased AT&T Broadband for $75 billion to become the nation's largest cable provider. The book's authors argue the deal was "strategically sound and flawlessly executed," but it was still made at a price that made positive net returns "almost impossible."

- By Nat Worden, Dow Jones Newswires; (212) 416-2472; nat.worden@dowjones.com