GE Stifles Rumors of a Sale for Media Unit

By Bill Carter

Now hear this: NBC Universal is not for sale. No how, no way. Looking to squelch persistent rumors, Jeffrey 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!” Immelt writes in a message for investors in the GE 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 was clearly meant to address the most prevalent of the recent rumors, which is that GE would 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 the fate of NBC 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 GE’s assets.

NBC executives, and occasionally Immelt himself, have tried to counter the rumors by citing the recent positive results for the unit, which has posted five consecutive 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, and 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 perceptions that it is underperforming, largely because, until recent months, the network’s prime-time programming – the most high-profile part of the company – remained stuck in last place among the four big U.S. broadcast networks.

On Monday, Nicole Parent, an analyst who covers GE for Credit Suisse, said she did not expect Immelt to sell NBC Universal because “it’s very clear to sell an asset at the bottom doesn’t make sense.”

She also said that only its prime-time sector was at the bottom, and while the overall picture at NBC was improving, prime time was what received the most attention. “Their cable assets are doing phenomenally well,” Parent said. “I look at them and see more opportunity than risk.”

Jeff Zucker, the president of NBC Universal, said frequently during the past year that the company was more a cable and film company than a broadcaster, and he 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 to improving the perception of NBC.

Immelt also said that NBC Universal as a business had “outperformed the GE average over the past 20 years.” He forecast that NBC Universal would increase its earnings by 10 percent in 2008.

Zucker said Monday that Immelt’s statement reflected the consistent support that had flowed from the company. “GE believes in NBC Universal,” 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.”

Immelt’s statement recalled a previous effort by a GE chairman to deflect rumors that the company intended to sell NBC. In 1993, Jack Welch said at a meeting of NBC employees that the network was not for sale.

Parent said she was not surprised that 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,” Parent said. “If there is no plan to sell it, why not go out and say it?”

Originally published by The New York Times Media Group.

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