GE Chairman Rejects Talk of NBC Sale
Now hear this: NBC Universal is not for sale. No how, no way.
Looking to squelch persistent rumors, Jeffrey R. Immelt, the chairman of General Electric , plans to make his most definitive statement yet about his company’s chief media asset.
“Should we sell NBCU? The answer is no!” Mr. Immelt writes in a message for investors in G.E.’s 2007 annual report, to be released Wednesday. “I just don’t see it happening. Not before the Olympics, not after the Olympics. It doesn’t make sense.”
The statement is clearly meant to address the most prevalent of the recent rumors, which is that G.E. will wait until after the Beijing Olympics in August, which will be televised on NBC and its cable channels, before deciding whether to unload the division.
An article in The Financial Times in October, citing “people close to the situation,” said that NBC’s fate would be decided after the Olympics and that the possibility of a sale was tied to “lagging performance” by NBC Universal and an “awkward fit” with the rest of G.E.’s assets.
NBC executives, and occasionally Mr. Immelt himself, have tried to counter the rumors by citing the recent positive results for the unit, which has posted five straight quarters of growth and finished 2007 with $3.7 billion in profit, about 7 percent more than in 2006.
Much of that growth was fueled by the strong performance of NBC’s cable division, which includes the highly profitable channels CNBC, USA and Bravo, as well as its film division, which had its most successful year financially last year after releasing hit movies like “The Bourne Ultimatum,” “Knocked Up” and “American Gangster.”
But NBC has continued to be dogged by the perception that it is underperforming, largely because, until recent months, the network’s prime-time programming — still the most high-profile part of the company — remained stuck in last place among the four big broadcast networks.
On Monday, Nicole Parent, an analyst who covers G.E. for Credit Suisse, said that she would not expect Mr. Immelt to sell NBC Universal because “it’s very clear to sell an asset at the bottom doesn’t make sense.”
But she amended that to acknowledge that only NBC’s prime time is at the bottom, and while the overall picture at NBC Universal is improving, prime time is what receives the most attention. “Their cable assets are doing phenomenally well,” Ms. Parent said. “I look at them and see more opportunity than risk.”
Jeff Zucker, the president of NBC Universal, has said frequently over the last year that the company is more of a cable and film company than a broadcaster, and he has even cited the results of its theme park division, which also completed its most profitable year.
But he has acknowledged that reviving the fortunes of its prime-time shows would be critical in improving the perception of NBC.
Mr. Immelt, in his message to shareholders, said that NBC Universal as a business had “outperformed the G.E. average over the past 20 years.” He also forecast that NBC Universal would increase its earnings by 10 percent in 2008.
Mr. Zucker said Monday that Mr. Immelt’s statement reflected the consistent support that had flowed from the company. “G.E. believes in NBC Universal,” Mr. Zucker said. “They want us to win. If we continue to perform, the questions of whether GE is going to sell NBC will go away.”
The statement from Mr. Immelt in the annual report recalls a previous effort by a G.E. chairman to deflect rumors that the company intended to sell NBC. In 1993, Jack Welch, then the chairman, told a meeting of NBC employees that the network was not for sale.
Ms. Parent said she was not surprised that Mr. Immelt would want to try to assure shareholders and the business community that GE intended to hold on to NBC Universal. “A lot has been written about the potential sale of NBC,” Ms. Parent said. “If there is no plan to sell it, why not go out and say it?”
-- CNBC is part of NBC Universal