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GE getting its peacocks in a row for possible ownership changes at NBC Universal

October 16, 2009 |  8:18 am

General Electric Chairman Jeffrey Immelt said this morning that the company was preparing for possible ownership changes at NBC Universal.

During a conference call to discuss the industrial giant’s disappointing third quarter earnings, Immelt responded to an analyst’s question about possible changes for the media company.

“NBC Universal is a great franchise that has consistently delivered income growth and cash, pre-recession. It’s been a solid performer,” Immelt said. But “we expect this to be a reset world, and it’s a good time to talk about the portfolio.”

Immelt acknowledged that GE has been preparing for changes because its partner – French telecommunications company Vivendi – has been considering disposing its 20% stake in NBC Universal. Each year, Vivendi has a three-week window when it can exercise its option to sell its holdings, and that window opens Nov. 15.

GE has the right of first refusal to buy Vivendi’s stake, but that would require GE to come up with billions of dollars in cash. That is a tall order when the company’s balance sheet has been under strain because of the sluggish economy and weakness in its capital finance division.

“This year we just wanted to be ready for several scenarios; one might be an IPO or another strategic partnership like the one we have had actually with Vivendi,” Immelt said. He did not discuss the company’s negotiations during the past few months with cable television giant Comcast Corp. to buy GE’s controlling stake in NBC Universal, or the likelihood of a public offering of Vivendi’s shares.

“I don’t have a specific pronouncement or a specific need for cash,” the GE chief said. “In many ways, we plan to operate NBC U over the long-term or partner if that accelerates the growth of the franchise.”

For the quarter ended Sept. 30, NBC Universal generated revenue of $4 billion, down 20% from a year ago. The unit posted $732 million in profit, up 13% from 2008 when the broadcaster lost money on the Olympics. NBC Universal also benefited in the quarter from a one-time gain of $550 million from the restructuring of its stake in A&E Television Networks, which includes the Lifetime cable channels.

GE said the launch of "The Jay Leno Show" in prime time exceeded expectations. General Electric, meanwhile, saw its overall net earnings tumble 45% to $2.5 billion in the third quarter, compared with the year-ago period. Revenue came in at $37.8 billion.

-- Meg James