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Who Really Wins, Loses in GE-Comcast Deal?

Companies shouldn't get involved with businesses outside of their wheelhouse, since that split focus can drag down both sides. Management of the disparate units have little in common, and decisions are rendered more complex.

Even with poor ratings and lackluster box-office performance by most major theatrical releases, NBC Universal has had the highest operating margin of any segment at the company for five of the past six years and could again take that distinction this year, as the following graph depicts.

The truth is that none of GE's divisions are performing well as of late, so to claim that underperformance may be due to NBC Universal is creating a scapegoat for the problem.

Poor demand for industrial products and a cancerous finance arm are to blame. Selling NBC should help General Electric refocus itself, though there's no easy fix for the company's malaise.

The real winner is Comcast, which is acquiring a once-dominant name that could easily reach the top again with better programming and a focus on digital initiatives like Hulu and the plethora of cable channels that are part of the deal.

In hindsight, the investment in NBC probably wasn't worth it because of low returns and headaches. It was simply another poorly thought through merger than needed to be unwound. Comcast is the winner more than GE is the loser.

-- Reported by David MacDougall in Boston.
Prior to joining Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.
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