There's all kinds of excitement in Beijing this month. We're seeing records that won't be equaled for a long time--in swimming, in track and field, and maybe in corporate synergy as well.
An obvious winner is General Electric Co.'s NBC Universal unit, which paid $894 million for U.S. television rights to the Olympics. With around 30 million viewers a night, network ratings have surpassed expectations, thanks in part to Michael Phelps' successful quest for a record eight gold medals. Add in millions more people following the games on NBC's cable channels and Olympic website, and NBCU's
profit will top $100 million, according to executives cited in a New York Times article.
Other GE units have benefited directly as well. Sales of power and other equipment in connection with construction for the games total $700 million, according to the company.
Finally there's
the goodwill effect for GE's water, power and infrastructure businesses going forward--reinforced by GE's sponsorship of the games, including those ads with the cute kids and the dragon. Chairman Jeff Immelt said in an interview with the AP today that GE is
on track to double its sales in China to $10 billion by 2010.
All of which would seem to strengthen the case for GE continuing to own NBC Universal, despite calls by some investors to sell it. In the AP interview Immelt says, not for the first time, that GE has no plans to divest NBCU. And at least this week, it's hard to argue with his assertion that GE is running the media business well.
But it's also hard to imagine the next occasion when the various parts of GE might function together in quite this manner. It's not every decade you get an emergent superpower--hungry for both recognition and turbines--throwing itself a coming-out party.
GE's commercial and industrial group, including its appliances division, is of course already slated for a
spinoff. Barring a big improvement in GE's share price, it seems likely that the calls for restructuring will continue. -
Kenneth Klee
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