Responding to recent calls for General Electric to spin off NBC Universal, GE Chairman and CEO Jeffrey Immelt said he sees strong growth ahead for the news and entertainment unit but that "nothing is safe."
“I think NBC Universal is in a very good cycle for us right now,” Immelt said in an interview on CNBC, which is part of NBC. “It’s a good business and we run it well. I’ve said to you guys (at CNBC) what I’ve always said to investors: The second we think an industry is not good for us, or the second we think someone can run a business better than we do, we sell it.”
Immelt also said GE had no interest in bidding for Dow Jones, which has received a $5 billion takeover offer from Rupert Murdoch's News Corp.
Last month, Citigroup analyst Jeffrey Sprague said GE should spin off its NBC and GE Money Units as well as its real estate assets to unlock value in the core company. As a stand-alone company, he said, NBC would be better able explore acquisitions or sell itself to a larger media company.
“GE stock has basically gone sideways for five years despite solid underlying execution,” Sprague said in a research report. “We believe GE’s size and complexity is working against investor interest in the stock and has contributed to further valuation erosion.”
While sounding bullish on NBC, Immelt said he's had no qualms about shedding underperforming operations. Since becoming CEO, he said, he has sold divisions that once generated about 40% of GE’s earnings and boosted overall profits.
“I’ve been pro-investor,” Immelt said. “I’ve been aggressive with the portfolio. I think by the second half of this year we’re going to be growing double-digits at NBC Universal again. We’ve got the Olympics and the elections in 2008. We’ve got a great growth digital platform, and we think it’s a good business for us.”
“We’re always looking to see if we can create shareholder value through portfolio and always will,” he added. “Nothing is safe. Everybody in the company has to perform.”
Murdoch is believed to be seeking Dow Jones, publisher of the Wall Street Journal, to help launch his Fox business news channel later this year, which would compete with CNBC. That has prompted speculation that GE might offer to buy Dow Jones, which has a partnership with CNBC that extends until 2012.
But Immelt said newspaper publishing is a “separate and distinct business away from our core competency.”
"I would say we have no interest in (bidding for Dow Jones.)," Immelt said. "Rupert (Murdoch) is a successful guy and I respect everything he does. CNBC is a very valuable asset to GE and NBC Universal and we will absolutely feel great about position and we think this is going to be a good growth business and it almost doesn’t matter to me what they do from a strategic standpoint. We believe in the long-term growth and health of CNBC.”