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GE, Uncle Sam, and the Future of TV

Stocks in this article: GC CMCSA

FAIRFIELD, Conn. ( TheStreet) -- General Electric (GE) has proven skills lobbying on both sides of the aisle, an asset that may prove critical to the success of the much-anticipated sale of a controlling stake in its NBC Universal division to Comcast Corp. (CMCSA).

While some commentators have said getting regulators to approve a deal will be complicated, Antoinette Bush, a Washington D.C.-based partner in charge of the Communications Group at Skadden, Arps, Slate, Meagher & Flom says that should not be a major issue as, despite potential antitrust concerns, there are no rules that would bar a Comcast acquisition.

But that is not to say the government won't play a crucial role in NBCU's future, particularly the NBC television network.

DirecTV Group (DTV)and Liberty Global (LBTYK) Chairman John Malone told CNBC's David Faber in an interview aired Monday that the business model for network television is broken, with the Internet (A.K.A. Google (GOOG)) having sucked up all the ad revenues.

"It's going to have to be subsidized if it's going to continue and maybe four is too many," Malone said, referring to NBC, CBS Corp. (CBS)'s CBS, News Corp. (NWS)'s Fox and Walt Disney (DIS)'s ABC network.

Malone says two of those could become giant cable networks, while the other two "end up with retransmission fees and support localism."

The question, then, is which model would be more profitable. A TV network that relies on government subsidies hardly sounds like a profit machine. Then again, if anyone can figure out a way to wring profits out of the government, it is GE. The U.S. government is GE's largest customer, accounting for 4% of its revenues in 2008.

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