Immelt bearish on analog biz
EmptyThe peacock has peaked, according to General Electric CEO Jeffrey Immelt.
The top exec at the energy company offered a dim view of its broadcast business in a closed-door, town-hall meeting Wednesday with employees at GE-owned cable business channel CNBC's headquarters in Englewood Cliffs, N.J.
"I think primetime classic analog network business is going to have limited growth. There is no doubt about it," Immelt said, according to excerpts of his remarks obtained by The Hollywood Reporter.
In Immelt's candid talk at 10 a.m. EST, he touched on a variety of issues affecting NBC Universal in the wake of layoffs announced last month. He also expressed misgivings about the company paying too much for Internet site iVillage but declared "bring it on" to News Corp.'s proposed cable business channel that will become an instant rival to CNBC.
Immelt also made it clear that GE, perpetually the subject of speculation over its involvement in the media, is here to stay.
"This is a very important business for GE, a very important business," Immelt said. "A business we will stay in, a business that we've been good at and that we need to continue to be good at when I look at the future of where the company is going and where we have to be."
The meeting, Immelt's first with CNBC employees in more than a year, also was attended by NBC Universal chairman and CEO Bob Wright and NBC Universal Television Group president Jeff Zucker. Neither executive spoke, however.
Immelt expressed confidence in their ability to engineer a turnaround for the peacock but noted that the economics of broadcast TV have changed so that his expectations for growth -- whether NBC's or its competitors -- have greatly diminished compared with the profits achieved during the network's 1990s heyday.
"But the fact here is whether you pick Fox or ABC, that the business that's No. 1 will make 40% less than we made when we were No. 1," Immelt said. "So now when we look up and say, 'Hey we will be No. 1 again someday,' we don't get back to where we started from ... we get back to a number that is 40% lower than where we started from."
Immelt did say he liked what he saw out of NBC this season. "The ratings on primetime are showing signs of turnaround. I'm glad we did the NFL," he said, referring to NBC's six-year deal for "Sunday Night Football" that kicked off in the fall.
As for NBC Uni's layoffs and cost-cutting decisions, Immelt justified them as painful but necessary moves.
"You've got to find different ways to run an entertainment business as you make the transition from analog to digital. And if you look at areas like news with the number of acquisitions that we've done and think about running it without hurting content but running the back rooms the way we'd run any other business in GE then you got to make changes."
At one point, Immelt compared NBC Uni to a dog, but in his mind, one capable of learning new tricks.
"It's like your dog broke its leg and you have to put it to sleep," Immelt said. "So the second NBC, which has doubled its earnings in the last five years, has a bad year everybody says, 'OK, you have to sell NBC.' You know you do have to fix things every now and then if you run a company. You do have to run through a process of making things better. It's not just a ... the dog broke its leg, let's shoot it."
Immelt also discussed NBC Uni's strategy in the digital arena, indicating the company considered getting in business with YouTube and MySpace.
"I didn't know how to manage a viral site inside GE," Immelt said. "And, I mean, we looked at YouTube, MySpace, things like that."
Immelt went on to concede that the conglomerate's $600 million acquisition of iVillage in March was overpriced, though he waxed optimistic that NBC Uni would mine the online venture's value.
"You know we probably overpaid for iVillage, but I've got an asset that can grow 30% a year for as long as the eye can see," he said.
Immelt also said of iVillage, "Is it as sexy as the other things online? No. But is it something we can add a ton of content with and make good money with over time? Absolutely."
Immelt also singled out CNBC for praise, admitting that not long ago the cable channel's misfortunes had him questioning its prospects.
"And I think you're ready to play from a position of strength versus 18 months ago, which I didn't really feel that way," he said.
Immelt alluded to News Corp.'s own business channel, expected to launch sometime next year, as a challenge CNBC was now prepared to face.
"I think we're ready for Fox should they decide to come," he said. "And you have to have the attitude of bring it on ... if it happens, it happens."
Immelt's discussion, which involved a Q&A with employees in attendance, was intended as a pep rally for CNBC as it begins to shake off the ratings doldrums of recent years.
Paul J. Gough in New York contributed to this report.