Friday, December 04, 2009

633 NBComcast

633 NBComcast

David Sarnoff is whirling in his grave. Again.

The first time was in 1986 when the company he helped build and later headed was re-acquired by General Electric, which was one of the four original components that formed RCA. (The other three were AT&T, Westinghouse and United Fruit, but GE called the shots starting in 1919.) Sarnoff didn't live to see '86. But you can be sure there was some churning beneath the ground at Kensico Cemetery up in Westchester.

That whirling probably stopped after a time (explanation to come.) Now it has resumed as GE prepares to sell NBC to the cable TV upstart, Comcast.

When one venerable company takes over another, there's always gnashing of teeth, but GE and RCA/NBC had a shared heritage. When GE Chairman Jack Welch tapped lawyer and financial services chief Bob Wright to head the newly acquired NBC, the NBC staff gasped as one. The big question was "what the hell does a bean counting lawyer like this know about 'our art?'"

Turned out the answer was not much, at least not in the beginning. But Wright, middle aged dog at the time of his appointment, learned new tricks. And he eventually turned NBC from a creaky old broadcasting company into a global media monolith. He was probably more successful at NBC than anyone had been previously, though not the pioneer that Sarnoff was.

GE came into something resembling its present existence through some mergers and acquisitions before and during 1892. And in more than a century of existence learned to deal fairly reasonably with more labor unions than there are ants at a picnic.

Now, comes Comcast, which has been around since 1963 and currently is the largest cable system operator in the country. It has a market capitalization of 45 billion or so, which is real money until you compare it to GE's market cap of more than 170 billion dollars. Granted NBC accounts for only part of that. But at 14 billion for a 51% interest in the network and all its holdings, including a gazillion cable channels, half a gazillion owned and operated TV stations, the Spanish speaking Telemundo Network and who knows what-all else, this is a minnow swallowing a whale and at a Dollar Menu price.

And it's a regulatory and labor relations nightmare. One labor publication says Comcast is trying to squeeze out its labor unions, something GE probably also would like to do, but won't.

Will there be an anti-trust investigation? Probably. Will the Federal Communications Commission look into this? Certainly. Will consumer groups agitate against the acquisition? Without a doubt. Will the acquisition go through? In some form, undoubtedly yes.

Would that General Sarnoff could arise from the dead and call for a strategic retreat.


Shrapnel:

--Hofstra University on Long Island canceled its football program, largely because few knew they had one and those who knew paid it no attention. That leaves them with a pretty nice, pretty new stadium. They'll probably raze it and put up something more academically useful -- like a much needed building for the ever expanding basket weaving department.

--Every time you turn around, you find a new tax as your income falls. The city of Pittsburgh PA is the latest. They want to tax tuition. Probably figure college costs are too low.

--Who do you believe when you have two atomic clocks next to each other and they disagree on what time it is? If you think customer service is bad at computer factories, wait until you have to reach someone like that at a clock works. "Your expected wait time is 23.45 minutes. No, wait, it's 23.56 minutes. No, wait it's 22.94 minutes."




I'm Wes Richards. My opinions are my own, but you're welcome to them.®
©WJR 2009

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