BREAKINGVIEWS – Is Conan O’Brien a $40 million bailout recipient?

By Reuters Staff
January 20, 2010

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Rolfe Winkler

NEW YORK, Jan 19 (Reuters Breakingviews) – Conan O’Brien is expected to receive $40 million for leaving NBC, the media unit of General Electric, itself among the largest recipients of taxpayer help. While it would be a stretch to compare the American late-night talk show host to a Goldman Sachs or Citigroup banker, he’s only a few steps removed.

Though it wasn’t a recipient of direct aid from the Troubled Asset Relief Program, GE availed itself of perhaps an equally important bailout facility, the Temporary Liquidity Guarantee Program overseen by the Federal Deposit Insurance Corp.

Participants in the scheme were able to issue debt with a government guarantee, receiving explicit taxpayer backing in the event of default. Though GE was just one of 88 firms with outstanding Uncle Sam backed debt as of October 31, its $60 billion of issuance accounted for nearly a fifth of the $315 billion total.

Unlike some of the banks that received direct equity injections from the government, GE can argue it is exempt from the same scrutiny over compensation that has bedeviled financial companies including Citigroup, Goldman and American International Group.

But without the FDIC’s largesse, the group’s troubled financial arm, GE Capital, would have struggled to fund its $650 billion balance sheet. That, in turn, could have forced its parent to liquidate assets, starting with NBC. In a truly worst-case scenario, GE might have even had to seek protection from its creditors.

Had NBC been dumped in a fire sale, new owners could have demanded changes to contracts like O’Brien’s. So he owes a bit of thanks to taxpayers for his $40 million payday. True, that’s not the same as, say, a Citi banker fighting for a bonus after the government bailed out the bank. But it’s only a few steps removed.

CONTEXT NEWS

– Conan O’Brien and NBC have reached an agreement to part ways after the television network canceled his role as host of the Tonight Show, according to the Wall Street Journal. The settlement would have NBC, the media business that General Electric is selling to Comcast <CMCSA.O>, pay $40 million to O’Brien and his staff and includes a non-disparagement clause to prevent the late-night talk show host from criticizing his former network.

– The deal will permit him to return to television for a competing network within a year. News Corp’s Fox is said to have offered him a slot.

(Editing by Rob Cox and Martin Langfield)

((rolfe.winkler@thomsonreuters.com)) Keywords: BREAKINGVIEWS NBC/

332 comments

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