GE topper Jeffrey Immelt sought to put an end to rumors that the conglom plans to sell NBC Universal, even though the No. 4 media company strays from GE’s long-held axiom that it be first or second in each of the markets in which it competes.
Rumors of a sale have long followed NBC and pre-date the acquisition of Universal, but days after moving aside Bob Wright and installing Jeff Zucker as CEO, Immelt offered a spirited defense of his media unit.
“No,” he said flatly, when asked by Conde Nast Portfolio editor-in-chief Joanne Lipman if he’d considered a sale, adding later, “I can’t think of a scenario in which we’d do it.”
He said double-digit earnings growth at Disney, News Corp., CBS and Viacom shows “it’s a good business that has plenty of legs left.”
The sale rumors, he said, are little more than a creation of the press.
“A decision like selling NBC U would be made by the board and by me,” he said. “That’s 16 people who would have anything to do with it, and I know they are not talking to the press.”
Immelt said GE fundamentally likes the media business because there is no structural impediment that hinders growth, such as the price of an essential commodity. He compared NBC U’s situation favorably to that of the company’s plastics division, which was hit by the high price of benzene and is now on the block.
“We like businesses where good management is more important than good luck,” he said.
The current flood of private equity dollars means anyone selling a business has a better shot at a good price, but Immelt said GE is better off operating NBC Universal and reaping benefits from its growth.
“When you’re in a good industry and you’re good at it but not where you want to be, you fix it,” he said.
NBC U, GE’s smallest division by revenue and profit, usually amounts to a few paragraphs on the conglom’s proxy statement, so it’s unusual for Immelt to spend so much time discussing its strategy and prospects.
But in explaining his decision to elevate Zucker, he offered a granular understanding of the nature of the business, down to an explanation of how NBC fell from first to fourth in the ratings.
“Some shows we hung onto longer than we should have because they were high-quality,” he said. “We got complacent; we stopped taking risks.”
He pointed to “Heroes” and “Friday Night Lights” as keystones to a turnaround, as well as the cheap-to-produce “Deal or No Deal,” which offers “an economic model that’s appealing.”
“That said, being No. 4 is not acceptable to our company,” he said.
He also served notice that the company would defend its copyrights online and cited Viacom’s pulling of its video from Google’s YouTube as a tactic NBC Universal would follow if forced to do so.
“In a digital world, content is valuable, and we will protect ours to the death,” he said. “If we choose to sell it and get good value for it, it will be our choice and our terms. If we don’t and someone takes it, we will see them in court.”