GE to decide on NBC after 2008 Olympics

By Francesco Guerrera, Joshua Chaffin and Aline Van Duyn in New York

The fate of NBC Universal, General Electric’s entertainment unit, will be decided only after the Beijing Olympics, with executives at the US conglomerate ruling out a sale before August’s showcase event, according to people close to the situation.

NBC, whose value is estimated at about $40bn, has been the subject of repeated sale rumours because of its lagging performance and the awkward fit with the rest of GE’s industrial and financial businesses.

The issue is likely to resurface on Friday, when GE reports third-quarter earnings that should show signs of improvement at NBC.

People close to the situation say that Jeffrey Immelt, GE’s chairman and chief executive, will not consider the future of GE’s 80 per cent stake in NBC – which had sales of $16.2bn and profits of $2.9bn last year – before the Olympics.

The other shareholder, the French media group Vivendi, is not seen as a potential buyer or a long-term owner of the shares. Under a deal with GE, Vivendi has the right to ask the US company to buy back its 20 per cent stake or force a listing of NBC.

GE declined to comment on NBC, whose assets include TV channels, a film studio and theme parks.

The Olympics are expected to provide NBC, which owns the US TV rights to the event, with a windfall in extra advertising revenues as well as a chance to display its technological and journalistic prowess. The games also allow GE to boost sales of its aviation, medical technology and other businesses in China. GE is forecasting $500m in extra sales from Olympics-related contracts, excluding NBC.

A year ago, NBC announced a broad restructuring aimed at generating $700m in cost savings. Jeff Zucker, who was named chief executive of the business in February, has been trying to convince investors to look beyond its broadcast TV heritage to growth opportunities overseas and in its expanding portfolio of cable networks.

This week, NBC announced plans to acquire Oxygen Media for $925m, adding it to a stable that includes Bravo, the Sci-Fi Channel and the USA Network, among others.

Mr Zucker told the Financial Times that the Oxygen acquisition and that of Sparrowhawk, another cable group, in August, underlined GE’s commitment. “It’s about performance, and if NBC Universal is performing, I think we’ll be here for a long time,” he said.

GE executives argue that any decision to sell will depend on the overall effect on the conglomerate, particularly its valuation and tax rate.

Copyright The Financial Times Limited 2007