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08.07.2008 12:00AM
GE Says Olympics Cash Cow NBCU is Not for Sale
FAIRFIELD, CONN.: General Electric (NYSE: GE) doesn“t intend to sell off NBC Universal any time soon, despite persistent rumors to the contrary. GE Chairman and CEO Jeffrey Immelt noted in a letter to investors that selling NBCU “doesn“t make sense.”

“The business has outperformed its competition and the GE average for the last 20 years,” Immelt said. “Our diversified content position is very strong. Content is increasing in value in a digital world. We are in a good cycle around the Beijing Olympics, the U.S. elections, and the 2009 Super Bowl.”

The media division that includes NBC is poised to turn in 10 percent earnings growth this year, with overseas markets posting as much as 20 percent annual growth in the coming years.

“NBCU provides us with a leading perspective on the digital transformation,” Immelt said. “NBCU adds value to GE, and GE adds value to NBCU. This is true now, and it will be true in the long term as well.”

He also noted how revenues within the division have shifted, reflecting the larger migration to platforms other than broadcasting as well as NBC“s poor ratings performance over the last four years.

“NBCU is a great example of a business that becomes more valuable as its market evolves,” he said. “In 2002, 75 percent of its earnings derived from NBC broadcast television. But we realized that the broadcast model, while important, would grow more slowly in a digital world.”

Today, Universal Pictures, the Internet properties and the cable networks--MSNBC, Bravo, USA Network, and the recently acquired Weather Channel--represent 80 percent of the division“s revenue.

GE, based in Fairfield, Conn., makes everything from light bulbs and refrigerators to loans to jet engines. The company has been going through a restructure, and speculation about what divisions would be spun out has persisted over the last year or so. The fridge and loan businesses are on the block, but as long as the media division is making money, it seems unlikely for GE to sell it, analysts noted.

GE generated $22.2 billion in net income on revenues of $173 billion last year. Share prices have been holding between $28 and $29 during the first week of August. -- Deborah D. McAdams


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