Sum Value of Zero


I’ve been in the business of broadcast, advertising and marketing for 48 years.  Approximately 17 of those years was spent in broadcasting so you can imagine my surprise while having lunch with friends of mine to learn that Comcast, in evaluating the purchase of NBCU, placed a sum value of zero on the NBC Television Network.  Further that the primary reason for purchasing Universal NBC was to acquire the cable properties owned by this conglomerate.  I was almost speechless at the idea the Keith Olbermann’s slash mark rated show some how had more value than the Today Show, Jay Leno and prime time dramas to name just a few of the NBC TV network assets.  Of course I should have seen it coming, after all if you were in broadcast in the early sixes and seventies you hammered away at the concept of change and the supposition that it happened in all aspects of business but most certainly the world of advertising although it probably would not change the business of national broadcasting.  Wrong!

I am particularly interested in NBC and its ownership by GE or as those of us who worked there frequently referred to it is Generous Electric. As you might guess this was not always a complimentary adjective.

I hope you’ll forgive me if I feel like I have a particularly good insight into the pending sales by GE of video assets to Comcast.  In my role at GE Broadcasting I was a member of a small committee appointed by Reed Shaw, President of GE Broadcasting and yes for those who might be wondering, the father of Mike Shaw, a modern day power in network broadcasting.  The committee was made up of radio and TV management within the company and our assignment was in 1974 to determine what the business was going to look like in 20 years and make recommendations to the company on GE’s participation in the field if any, and the areas most likely to provide us with good business opportunities.  However there was a problem.  The company under the direction of Reg Jones had allowed us to purchase two FM radio stations at a very low cost, remember this was 1974 and FM was just beginning its emergence as a valuable tool in the radio world and a good media buy in the advertising world, yet we almost had to hid the fact that we had purchased the stations because while Reg Jones approved there were several members of the board of directors who did not want the company to be in the media world.  They were afraid of the scrutiny of the company by the FCC because of the media ownership, in fact they only reason they didn’t’ sell the properties we owned which included TV stations in three markets and radio stations in five markets was because of return on investment stated as a percentage was astronomical when compared to other products or service in our division such as “white goods.” 

It took our committee about a year of off campus meetings and unending debate to arrive at some conclusions and recommendations.  One of the recommendations was that we continue to buy cable distribution companies [we had a few small operations] and that we should also buy major market TV stations, we weren’t so bold as to suggest buying a TV network.  We did recommend that we continue to buy FM radio stations as long as they continued to be available at attractive prices.  Our recommendations fell on deaf ears at Fairfield’s headquarters office because there was a policy in place that did not allow the company to make GE stock available to purchase new properties other than on a dollar to dollar share basis.  Major market TV stations were selling at high multiplies of earnings in the seventies so we were effectively cut out of the opportunity to buy, that is until Jack Welsh took over the company.  I had the opportunity to serve on a committee he chaired when he moved to take over the sales and Service division.  We were looking at ways of combing our advertising dollars to gain more advantageous pricing.  Jack was dynamic then and demonstrated just how forward thinking he was when he convinced the board to become a major player in the broadcast market and eventually he directed the purchase of NBC.  Jack philosophy was be number one or two in a product or service category or don’t be in that business.   

One final note, our committee made some predictions and probably in light of this pending sale the most interesting one was that TV stations would in twenty years no longer take their programming primarily from network television services but rather buy programming on the open market and run it at the time the stations felt would best service their viewers and generate the most advertising dollars…maybe the sale of Universal NBC and the valuation of the TV network of sum value of zero is the beginning of what we predicted in 1974.

David C. Martin, President/The Martin Group
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