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Should NBC U unplug GE?

Citigroup analyst calls for breakup

Since 1985, when it joined refrigerators and jet engines as assets of General Electric, NBC has faced questions of a spinoff or sale. The notion has been raised more frequently since 2003, when NBC Universal was formed, given that rivals like Viacom and Time Warner have shed significant parts.

The latest call for a breakup comes from Citigroup analyst Jeffrey Sprague. In a report released Friday, he pointed out that the company’s stock “has basically gone sideways for five years despite solid underlying execution. … We believe GE’s size and complexity is working against investor interest in the stock and has contributed to further valuation erosion.”

Once freed of the diversified mega-conglom’s shackles, NBC U could be better able to explore a deal with another media conglom, Sprague argued.

Some other analysts have suggested that Google could acquire NBC U, which accounted for about 10% of GE’s $163 billion in 2006 revenue, but the companies won’t address the speculation.

On the news Friday, shares rose 3% but closed flat Monday at $36.86.

Wall Streeters continue to mull the proper strategy for GE, the world’s second-largest company by market capitalization behind Exxon Mobil. It’s a puzzle straight out of Econ 101: Does a diversified portfolio minimize risk or impede growth?

Those focused on the entertainment biz, meanwhile, remain a bit bemused by the pairing of a largely industrial company with storied film and TV operations. For Universal, it’s the fourth industrial parent in the past decade. At least NBC’s former owner, RCA, made TV sets.

NBC topper Jeff Zucker and Alec Baldwin, star of NBC’s “30 Rock,” acknowledged the irrefutable oddness of the pairing in a joint interview in Fortune accompanying a more straightforward take on Zucker’s challenges at the helm.

“Have you ever considered adding a seventh Sigma to Six Sigma?” asked Baldwin, adopting his “30 Rock” alter ego, Jack Donaghy. “As a GE man, what is your favorite appliance? Think. What can Jeff Zucker not do without when he’s making breakfast for his four children every morning?”

Answered Zucker, gamely, “My Trivection oven.”

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