Sell NBC Universal? You gotta be kidding!

November 10, 2008

NBC is once again stuck in last place in prime-time ratings; its much-hyped Olympic coverage is over, so are the elections; advertising across media is under pressure; and dishing out $67 to hang at the Universal Studios theme park probably isn’t as appealing when you could soon lose your job, house, car, etc.

Still, NBC Universal would seem more secure within parent General Electric than it has been for some time. Indeed, most of the talk about a possible sale has faded away. Here’s what analysts told us for a recent article.

“I’ve struggled with it forever, in terms of why GE has it, especially now in a situation like this where ad revenues are down,” says Mike Gandrud, senior analyst at Optique Capital Management. 
“I’d love to see them do something with it … Do I expect it to happen? No.”

“Eventually, I believe, they want out and have decided it doesn’t represent the kind of upside growth of some alternatives,” says Steve Ridge, president of media strategy at research firm Frank N. Magid Associates. ”For now, I think they missed the window.”

Why not sell? Get out of media at a time when media is under heavy pressure? A number of reasons, ranging from NBCU’s recent strong performance to its ability to generate cash. Oh, and of course, it’s next to impossible to sell anything these days at a reasonable price.

Daniel Holland, an analyst at Morningstar,  says, “The last time you want to sell something is when the price you’re going to get is below what it would generally command.”

He points to the trouble GE is having getting rid of the appliances division.  ”That business may not be the greatest business in GE’s portfolio but it’s a really solid business. If you’re trying to get into North America and you’re an appliance manufacturer, that’s an incredible brand to have. And so when you see how difficult it’s been for GE to get rid of something as attractive as that” you can imagine how hard it might be to get a decent price for NBC.

Keep an eye on:

  • Radio companies, facing heavy debt and a depressed advertising market, are facing huge challenges (WSJ.com)
  • Shari Redstone has resigned as chairwoman of Midway Games to concentrate on the troubled National Amusements (WSJ.com)
  • YouTube is set to announce a deal to show some full-length television shows and films from MGM (NYTimes.com)

(Photo: Reuters)

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