Why would GE ever sell NBC? Why would the Olympics ever pick ESPN?

I have been on the television beat for nearly 15 years. That means I have listened to a decade and a half's worth of rumors that General Electric was seriously thinking about selling its television business, the one it acquired in the 1980s.

And during that time, NBC has just gotten bigger ... and bigger ... and bigger. This morning, GE has announced that NBC is buying Carnival, the UK television group responsible for "Rosemary and Thyme," "Hotel Babylon," "Poirot," and "Jeeves and Wooster." The press release is below.

The most recent rumour -- sorry, rumor -- was raised earlier this month by a wire service, whose reporter had been hearing scuttlebutt that GE would almost certainly unload NBC after the Beijing Games. Of course, talk of any Olympics deals reminds one that recent megadeals for TV rights negotiated by NBC have always involved the parent company. When NBC makes money, GE makes money. And trust us, people, fifth place in prime time or not, NBC still makes a LOT of money.

The Reuters story admits that this was the ultimate rumor-killer: "Selling a business that was one of only two GE segments to report profit growth for the first six months of 2008 is not a top priority, investors said. NBC Universal profits were up 2 percent, while infrastructure -- which makes heavy equipment ranging from jet engines to wind turbines -- rose 21 percent."

Lest we forget, NBC's "Sunday Night Football" negotiations involved a handsome side deal for GE Lighting and the National Football League. And as GE chairman Jeff Immelt was reiterating on Monday that he had "never contemplated" selling NBC, he also revealed that other divisions of GE had generated $700 million in business with China as a result of the Olympics, on top of the $1+ billion take for NBC in ad revenues.

Thus, when you hear that ESPN is going to bid on the 2014 and 2016 Games, the question you have to ask is: Will the host cities get their own Disney theme parks? And if not, how can ESPN possibly compete with NBC? (ESPN's boast that it will carry the Games live on the West Coast, something NBC affiliates are perfectly capable of doing now, loses steam when you learn that 81 percent of U.S. television households are in the Central and Eastern time zones.)

Look, I'm no high-priced Wall Street analyst. But I have watched over the years as NBC has acquired one cable channel after another and turned them into ATMs. I am certain that they purchased Oxygen -- that overhyped, underdelivering mess of a women's channel -- at a bargain price, just like they bought Bravo, and with smart people at the helm (hi Lauren!) they will be printing money with that one too. And, no doubt, Carnival.

Too much attention is focused on NBC's network prime-time performance, but cable, with its niche focus and double revenue stream, is the new network. (Jimmy Kimmel's joke, that NBC was thinking of becoming a cable channel itself, was funny because it was oh so true.) And besides, NBC still makes piles of money before and after prime time. (Whether it will continue to do so is a discussion we've been having elsewhere.)

NBC UNIVERSAL SIGNS AGREEMENT TO ACQUIRE CARNIVAL

UK production deal marks first acquisition by NBCU's International Television Production division

LONDON – 20th August 2008 – NBC Universal announced today its agreement to acquire Carnival Film & Television Ltd, a leading UK independent production company. The deal represents the first acquisition by NBC Universal's International TV Production division, headed by Angela Bromstad, President, International TV Production. The acquisition is part of the company's efforts to expand its international business by building production presence outside the US. The announcement was made today by Peter Smith, President, NBC Universal International; Angela Bromstad; and Gareth Neame, CEO, Carnival.

Carnival is a world-renowned producer of quality scripted drama, whose lineup for 2008 has included Hotel Babylon (BBC) and Midnight Man, Harley Street and the forthcoming Whitechapel (ITV). Carnival was founded in 1978 and has produced 400 hours of popular drama for TV and cinema, including prestigious titles such as Traffik, The Grid, Poirot, Jeeves and Wooster, Hotel Babylon (Series 1-3), Rosemary and Thyme, As If, The Whistleblowers and The Old Curiosity Shop. The company has received more than 70 national and international awards and nominations including Academy Awards, BAFTA and RTS Awards. The company's clients have included major UK broadcasters such as the BBC, ITV, Channel 4 and Sky.

Under the terms of the agreement, NBC Universal will acquire 100% of the company, whose current shareholders are Southern Star (75%) and Gareth Neame, CEO of Carnival (25%). NBC Universal's acquisition also includes library rights to Carnival titles, as well as distribution rights currently held by Southern Star.

Jeff Zucker, President and CEO, NBC Universal, said: "International growth is one of our key strategic priorities, and that includes boosting our ability to create programming for specific local audiences around the world. This acquisition will jump-start our efforts in the very important UK market. Carnival has a great track record, and we are excited about helping this first-class operation become even more successful".

Peter Smith commented: "This exciting agreement represents a further step towards our goal of complementing our quality brands with the capacity to produce quality, compelling local TV content with global appeal".

Gareth Neame stated: "I am excited to bring the company into the global brand that is NBC Universal under this groundbreaking deal, which offers great strategic opportunities for Carnival and all the talent who work with us. As a unique production model in the UK, I believe we will have so much to bring to our broadcaster relationships and the creative community. Equally, as a production base for NBC Universal outside of North America, we will be an important asset for our new parent. I am very much looking forward to working with Pete and Angela and to helping grow an international creative business centred here in the UK".

Angela Bromstad said, "Carnival is a highly respected TV production operation and we are delighted to welcome them into the NBC Universal fold. We feel this deal will prove an excellent strategic fit and present abundant international growth opportunities into the future".

The acquisition by NBC Universal represents a major strategic move into TV production outside the US and a key opportunity to enhance distribution and format production. The deal is part of NBC Universal's ongoing international growth strategy aiming to more than double non-US revenues by 2010, and follows the acquisitions of Sparrowhawk Media and a 26% share of NDTV Networks in India, as well as recent NBCU international channel launches, such as the launch of Sci-Fi Channels in Japan, Russia, Asia and Eastern Europe. Continuing NBC Universal international growth initiatives centre around further international pay-TV channels expansion, local TV and Film production and digital initiatives, alongside a focus on strategic growth markets.

On completion of the transaction, Carnival will be merged into NBC Universal's International TV Production division which is managed by Angela Bromstad, President, International TV Production, based in London.

The signed agreement is expected to close following receipt of customary regulatory approvals.

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About NBC Universal: NBC Universal is one of the world's leading media and entertainment companies in the development, production, and marketing of entertainment, news, and information to a global audience. Formed in May 2004 through the combining of NBC and Vivendi Universal Entertainment, NBC Universal owns and operates a valuable portfolio of news and entertainment networks, a premier motion picture company, significant television production operations, a leading television stations group, and world-renowned theme parks. NBC Universal is 80% owned by General Electric and 20% owned by Vivendi.

About Carnival: Founded by Brian Eastman in 1978, (originally as Picture Partnership Productions Ltd), the company has produced 400 hours of popular drama for television, cinema and theatre, both in the UK and US and has attracted more than 70 national and international awards and nominations, including Oscars, Emmys, BAFTAs, Royal Television Society, Oliviers and TONY Awards. Throughout the 1980s and 1990s Carnival spearheaded independent drama production in the UK, producing iconic shows such as POIROT, JEEVES & WOOSTER and BUGS, as well as multi-award winning mini-series such as TRAFFIK and PORTERHOUSE BLUE.

As well as being a significant drama supplier to UK broadcasters, the company has traditionally produced international drama, evidenced by shows such as BIG BATALLIONS and THE GRID. More recently the company has produced popular prime-time hits such as HOTEL BABYLON, ROSEMARY & THYME and AS IF. In December 2005 Gareth Neame, a former Head of Drama Commissioning at the BBC, joined the company as Managing Director and the company has since gone through a dynamic period of change with the solid bedrock of a strong library of drama productions complementing a diverse range of new projects in production and development. Brian Eastman left the company in December 2006 and in March 2007 Sally Woodward Gentle joined the company as Creative Director.

Comments

[Mark Jeffries]

Let me go out on a limb: Coming to NBC in September 2009--The American version of "Hotel Babylon." Leading into "Lipstick Jungle" on Wednesday nights.

[Doogie]

Aaron, here's more reasons why ESPN should not even come close to landing the 2014 and 2016 games.

1. The superb job NBC Sports (and their family of networks) coverage of the games. They've only gotten better with technology. Considering what they've been able to do, on NBC, MSNBC, CNBC, USA, Universal HD, and two dedicated channels for soccer and basketball, they've literally covered every event. (And a side note: Their web video streams and overall web site are first-rate.)

ESPN/Disney doesn't have near the capability that NBC Universal does. Oh, but what about ABC, ABC Family? Good point. Here's the other shoe that would drop if ESPN bought the Olympics rights....

2. Our cable bills would skyrocket, because ESPN would charge even more than now for carrying the channel on cable systems. Remember how ESPN decided to pony up $1.1 BILLION a year for Monday Night Football? It's not on ABC for a reason. ABC can't charge viewers to see it, but ESPN can. I'm sure Disney/ESPN will bid up whatever number NBC can come up with, but I hope they don't get it. ESPN has been way too irresponsible with how they treat their subscribers by the way they overpay for many of their sports entities.

NBC says they are going to eke out a smalll profit from broadcasting the Beijing Games. Considering what they've paid in rights' fees, coupled with the infrastructure and manpower needed to pull off such a herculean task, that's an incredible feat by NBC Universal. ESPN wouldn't have that same mindset....they wouldn't even care, because they don't need it. To make that profit, they'd just charge more for us to have the channel at home. And though I'm a sports nut, I'm getting weary of higher cable bills, which are spearheaded by ESPN's greed.

3. I don't want Chris Berman anywhere near Olympics highlights.

[Fred Farrar]

For all the whining about NBC delaying prime time coverage to the West Coast (and I live in Los Angeles ands find the practice annoying) it is hard to argue with the ratings.

And, according to NBC, the ratings in the Central and Pacific time zones have been higher than those who watch the early feed back east.

There are many things about NBC I believe are disasters, but the coverage of these games, with a 12 (or 15) hour time difference, has been magnificent.

ESPN's oh-so-snide references to the NBC live bug will hopefully not cause anyone to focus on its own ethical shortcomings.

How about that "SportsCenter" franchise, supposedly a journalistic endeavor, but which is instead is consistently used to analyze and hype games, leagues, and sports ESPN itself will (surprise!) be televising or broadcasting on radio or via your computer or phone.

I agreed with Mark. I'd be all for Disney/ESPN bidding for the Olympics the minute the company agrees to allow ESPN to be sold a la carte by satellite, cable and telco providers.

As it is now, about two thirds of the sub fees flowing to Disney for ESPN are from homes which never watch the channel. Why should they continue to be forced to pay for baseball, football, soccer, X-games, Little League baseball, high school football games and now the Olympics?

And if Disney does manage to outbid NBC (and reportedly Fox) for the games, how much will the ESPN monthly fees be raised?