NBC deal helping GE get back to its roots
WASHINGTON - For General Electric Co., the NBC entertainment division was always an odd fit.
One of the nation’s iconic industrial businesses, GE has spent 23 years making sitcoms and blockbuster movies along with jet engines, dishwashers, and light bulbs. The pairing of glitzy entertainment and gritty manufacturing has often confounded investors and even has been ruthlessly satirized by NBC’s own show “30 Rock,’’ in which a fictional network executive also heads a division that programs microwave ovens.
It’s a marriage that will likely soon end. As GE prepares for an expected $30 billion deal that will give control of NBC to cable TV operator Comcast Corp., the conglomerate is shifting its focus back to its industrial divisions.
GE is shrinking its finance arm that has been severely buffeted by the financial crisis. It has sold some businesses and shopped others around. And it is chasing nearly $200 billion in stimulus money from worldwide governments, much of it earmarked for such products as medical equipment and wind turbines. This new GE will likely look a lot like GE did before it acquired NBC in 1986.
GE has reached a tentative agreement to buy out the 20 percent stake in NBC Universal held by French media company Vivendi SA, according to a person with knowledge of the deal. GE and Comcast are then expected to turn NBC Universal into a joint venture, with Comcast holding a 51 percent stake. GE would likely fully leave the partnership in a few years.
The financial crisis and recession of the past year have been difficult for GE, which is based in Fairfield, Conn. The company was forced to slash its dividend by 68 percent. It lost its coveted top bond rating and its stock fell up to 90 percent below its 2000 peak. GE is still trying to work through big losses at its GE Capital lending unit, once the source of half the conglomerate’s profits.
GE earned $8.1 billion over the first nine months of this year on revenue of $115 billion - a 43 percent drop in profit and a 15 percent revenue decline.