Not for Sale: Massive Media Conglomerate

Since the day General Electric first acquired its way in to the media business back in 1986, it has had to deny it was about to divest its way out of the media business. Fueled by the growing assumption that G.E. had become way too complex to deliver the lush, consistent profit growth of years past, the latest round of speculation and denial has been pegged to the Beijing Olympics, with much of the chatter saying the deal would make more sense after the torch over the Bird's Nest was doused.

Even before the company's shocking first-quarter miss brought speculation to a full boil, G.E. was making big efforts to douse the heat. In his annual letter to shareholders in February, G.E. Chairman and C.E.O. Jeff Immelt could not have been accused of using waffling to clarify his intentions.

Should we sell NBCU? The answer is no! I just don't see it happening...not before the Beijing 2008 Olympic Games...not after the Olympic Games. It doesn't make sense.

Couldn't be any more clear than that, right?

Probably not. But, unfortunately for G.E., its seems that most people only reluctantly believe corporate bosses when they say they're not going to sell something when selling it would seem to make such good sense.

Still, it's hard to kill a solid drumbeat.

So once it was clear that NBC's ratings for the Games would completely thump expectations and bring in an additional $100 million, Immelt used the forum to again confirm G.E.'s commitment to the media business. Apparently, one of the handier features of owning a media business is the ability to do interviews in which you continue to douse speculation that you are selling your media business, as when Immelt told CNBC's Carl Quintanilla that divestiture has never even been considered.

"I always say, look, it's a good business. We run it well. We've never contemplated it. We don't think about it. We like the business."

Whew, it feels really good to finally get that settled once and for all: G.E. will not sell NBC Universal.

But, what if...

Nah, let's not speculate. The company has made its position clear. G.E. is an "infrastructure, media, and financial-services company," today and forever.

Ah, but what the heck. What if things change? What if Immelt suddenly comes to the radical conclusion that reliability and predictability are the keys to lifting G.E.'s price-earnings ratio to its appropriate level? What if he decides that while "content" can be a great business, no content business has ever really been reliable or predictable the way many of G.E.'s traditional businesses have been? What if he decides that few things are less reliable and predictable than the future of media conglomerates in the still-early days of the digital revolution? And what if he decides that it's no longer worth having the stock penalized by perceptions of NBC, a tiny contributor to G.E.'s overall profitability?

Or, even more understandable, what if he simply gets tired of living in the same world with Papa Bear?

So, just for giggles, let's speculate how things would go if Chairman Jeff changed his mind. If you were going to sell a massive media conglomerate, how would you spin it? What would the rescue memo advise?

Probably these six steps:

1. Say it's not for sale. And then say it again and again and again. Nothing compromises a bargaining position like a seller giving any hint of neediness.

2. Define it on your terms. Say "NBC Universal" to your average investor, and they'll mutter something about "fourth-place, Friends-less NBC." Set 'em straight. Repeatedly quantify how the network is not just a small contributor to G.E., but even a relatively small contributor to NBCU. Yammer incessantly about how you've figured out how to harness the steady strength of cable. In fact, do a few more minor deals to show that you're not selling, you're buying. To make sure your messages get through, start saying yes to a third of the media requests you get, which will translate into a low-level blitz. That will be important as you.

3. Clean and press your suit. Push Zucker's story forward, from "aging wonder boy struggles on the big stage" to "savvy young talent laser-locks on plan to thrive amidst industry revolution." This is the media industry, so don't underestimate how much "exposure" can translate into "stature." If you can, make sure that everybody knows he's a real relationship guy, not some Six Sigma robot who can't get a last-minute table at the Waverly. And, oh, make sure people know your best players are sticking around.

4. Lunch on the ascent. Don't wait for the up to arrive; start having chats with the likely acquirers on the first indication of positive momentum at NBC. Keep a straight face as you humbly admit the synergies you touted in Beijing are great, but nothing on the level another media conglomerate could realize with NBCU.

5. Smile and run. The morning you announce the deal, show up on the Squawk Box set to take the questions about why you sold. Let the feathers dangle from the corners of your mouth as you declare that the price was right. Shift hard to the G.E. business model. Confirm that you'll keep upgrading your portfolio, but declare victory in achieving the right "focus," reminding everyone of the other moves you've already made.

6. Do it again in 2010. When the financial markets fully recover, repeat this process for G.E. Capital. You'll probably have to do that one piecemeal, but the approach will need to be the same.

Ah, it's fun to speculate on the hypothetical. (Though, oddly enough, it seems that the first three steps have already been executed.)

Instead, let's get back to reality. What's going to happen to G.E.'s stock this year? Dunno. After all, we haven't seen the first episode of Knight Rider yet.