I orchestrated a record number of mergers and acquisitions during my 21-year tenure at NBC. But for every successful deal my executive team and I negotiated, deals that helped transform the network, there were as many failed efforts. They would have further reshaped NBC but died due to complications from circumstance and ego.
One case in point: In 1999 I met with Edgar Bronfman Jr., whose family business, the Seagram Company, then owned Universal, and together we hammered out a plan to merge NBC with Universal. We even had the support of the contentious Barry Diller, who became a director of the Seagram board after assuming controlling interest in their shared USA Networks Inc. In the end, family patriarch Edgar Bronfman Sr. decided not to relinquish control.
It turned out that 1999 was an active year for aborted big deals. That spring, NBC came close to merging with Sony Pictures Entertainment, but in the end accounting issues and negative tax consequences got in the way.
Chancellor Media Corp., a Dallas-based radio and outdoor advertising concern, aborted its $900 million acquisition of LIN Television Corp., in which NBC was minority partner with the Dallas buyout firm Hicks, Muse, Tate & Furst. It would have been a way to recover hundreds of millions NBC invested in various television and radio station partnerships with Hurst, which was a 12 percent owner of Chancellor.
You can’t always anticipate such opportunities; you simply have to be ready to act. You also have to recognize that you might not be able to do anything with those opportunities, and you can’t just shoot yourself. In business, you can calculate probabilities about the value you hope to create. But you really don’t know when you are buying something if it is going to be worth three times more in 4 years or one time less. It’s always an educated risk.
Hits
- Negotiated a 65-year lease extension on a dozen floors of the 30 Rock building at Rockefeller Center, crowned by NBC’s iconic peacock logo. New York City dispensation for low-interest financing and tax breaks to renovate its midtown Manhattan facilities secured the NBC/GE deal and rendered the Big Apple’s first street-side TV studio.
- Launched CNBC (Consumer News and Business Channel) in 1988. Chuck Dolan’s Cablevision Systems became a short-lived 50 percent equity partner in April 1989. NBC acquired the resources and affiliates of bankrupt Financial News Network for $154 million in 1991 to fortify CNBC on the Tempo TV cable platform it bought for $21 million from John Malone’s Tele-Communications Inc.
- Acquired a 50 percent equity stake in Rainbow Programming Services in 1989 from Chuck Dolan and Cablevision Systems (including regional sports channels, AMC, and Bravo). (Assisted by Tom Rogers.)
- Bought WTVJ, Channel 6 in Miami, for $270 million from Wometco Broadcasting Co. in 1989. The first broadcast network purchase of a rival’s affiliated station.
- Acquired 76 percent of SuperChannel as an international platform for CNBC in 1993. (Assisted by Tom Rogers.)
- Sold 49 percent stake in Court TV in 1994–95.
- Acquired TV stations in San Diego, Birmingham, Dallas, and Denver from Ronald Perlman in 1996. (Assisted by Warren Jenson.)
- Acquired 25 percent of AMC for $13 million.
- Acquired Outlet Communications TV stations in Hartford (CT), Providence (RI), Columbus (OH), and Charlotte and Raleigh (NC) for $311 million in 1996. (Assisted by Warren Jenson.)
- Launched MSNBC cable and online in 50/50 venture with Microsoft Corp. in 1998. (Assisted by Tom Rogers, David Zaslav and Andy Lack.) NBCU bought out Microsoft’s interests in two phases for about $1 billion.
- Acquired 32 percent stake in Paxson Communications for $415 million in 1999 and full control of the 60-station broadcaster in 2006, rebranding it the ION Network. (Assisted by Brandon Burgess.)
- Acquired 76 percent ownership of WXAS Dallas and KNSD San Diego in joint venture with LIN Broadcasting 1999. (Assisted by Warren Jensen.)
- Acquired KNTV from Granite Broadcasting for $250 million, converting it to NBC’s San Francisco area–owned affiliate in 2001. It replaced powerhouse KRON-TV over a compensation dispute with Young Broadcasting. The upset changed network-affiliate station economics. (Assisted by Randy Falco.)
- Acquired Telemundo for $2.7 billion equity and debt in 2001 in a deal I negotiated myself. Acquired Bravo from Cablevision Systems for $1.25 billion in a tax-efficient cash-out of NBC’s 25 percent interest in their Rainbow Partnership with Chuck Dolan’s Cablevision in 2002 in another deal I negotiated myself.
- Acquired 80 percent of Universal from Vivendi in 2004 for $14 billion. Acquired Vivendi’s minority stake in 2005. (GE/NBC sold 51 percent of the company to Comcast in 2011 for $13.8 billion. Assets included Universal Studios, theme parks, USA, and SyFy cable channels, and Universal TV.) (Assisted by Brandon Burgess.)
- Created NBCU Internet, Inc. (NBCi) in 1999 as a publicly traded umbrella portfolio for NBC’s online acquisitions and ventures. Its value fluctuated from $2.8 billion to $0 when the Internet bubble burst. It was disbanded by 2001.
- Acquired iVillage for $600 million in 2006.
- Launched Hulu partnership with News Corp. in 2007 to stream network programs.
Misses (the ones that got away)
- Declined initial stream of early offers in 1986–1987 as GE digested RCA and NBC. NBC refused a 20 percent stake in Discovery Communications and buying the satellite programming assets of Warner Amex Satellite Entertainment (including MTV, Nickelodeon, and Showtime) for roughly $500 million. The joint venture between Warner Communications and American Express eventually went to Viacom. NBC also could have acquired Viacom from CEO Terry Elkes, who eventually sold out to Sumner Redstone.
- Offered $400 million cash for 25 percent of Turner Broadcasting System and its CNN service in 1987, which was rejected by the major cable operators, who assumed majority control after rescuing the company from debt after spending $1.4 billion to acquire MGM in 1986.
- Announced but never launched the $1 billion SkyCable satellite programming equity partnership of NBC, Cablevision Systems, News Corp., and John Malone (contributing program channels and funds) and General Motors’ Hughes Communications satellite (contributing satellites and debt financing). After outlining the 108-channel service to areas without cable at New York’s St. Regis Hotel February 21, 1990, overleveraged media companies pulled out in response to financial pressures from 1991 recession and bank covenants.
- Jack Welch spent a fair amount of time as GE chairman entertaining many would-be suitors for NBC, including Marty Davis of Gulf and Western in 1992; comedian Bill Cosby and former CBS-TV/TBS executive Robert Wussler in 1993; Walt Disney’s Michael Eisner in 1994; and investors Marvin Davis (who bought and flipped Twentieth Century Fox to Rupert Murdoch in 1985). Ted Turner made several runs at NBC.
- Failed to acquire an interest in DirecTV with Cablevision System and John Malone in 1993. Tom Rogers considered this his biggest deal disappointment. It would have been about a $40 million investment in what has morphed into a $40 billion business.
- In the early 1990s, NBC considered acquiring Paramount and making a joint bid with Chuck Dolan’s Cablevision Systems for Madison Square Garden and Radio City Music Hall. Jack Welch nixed the deals, fearing they would further highlight GE’s already controversial media involvement.
- Jack Welch unraveled NBC’s signed and sealed acquisition of the Golf Channel in 1996 for $150 million while I was in Scotland on holiday with Johnny Carson. Jack was concerned that his critics already thought he spent too much time negotiating deals on the links, would further associate him with golf. A decade later Comcast paid close to $1 billion for the Golf Channel, which it brought into the fold when it acquired NBC Universal in 2011.
- Prolonged negotiations with Hicks, Muse, Tate & Furst for broadcast joint venture collapsed in 1999 over concerns about the management, emerging Internet and NBC’s fluctuating fortunes.
- Declined an offer from Thomas Middelhoff to acquire Bertlesmann’s music and publishing businesses, which were scooped up instead by Sony.
- Proposed $3 billion buyout of Turner Broadcasting System and its CNN service was squashed by Jack Welch after a testy meeting in Atlanta with Ted Turner in 1995. NBC’s offer ($22 a share) fell short of Turner’s asking price ($30 a share), and Welch feared Turner’s chaotic presence on the GE board.
- Could have acquired USA Network and Sci-Fi channel from Paramount/Time Inc. in 1999.
- Could have merged NBC with Sony Pictures Entertainment in 1999 were it not for thorny accounting and tax issues.
- Could have merged NBC with Seagram-owned Universal in 1999.
- Failed to attract Dow Jones as partner in CNBC, which put the publishing company on track to be sold to Rupert Murdoch’s News Corp.
- Considered acquiring MGM in 2000 but reluctant to own a movie studio, especially one with a tired film library and low television production involvement.
- Tried unsuccessfully to acquire the remainder of Court TV from its equity partners, John Malone’s Liberty Media and Time Warner 1998.
- Considered acquiring a stake in or all of AOL Time Warner in 2002 but GE didn’t want to finance an unwanted takeover.
- In 2003 bid $12 a share (below the $20 a share asking price) for Time Warner, which wanted to avoid paying hefty retransmission fees to networks. Deal fell apart over price and not knowing how to value AOL.
- Failed to swap investments that would have resulted in an ownership stake in National Geographic Channel in 2006.
- Failed to acquire DreamWorks in 2006. GE chairman Jeff Immelt likewise sabotaged the deal shortly after the NBC Universal merger, having already heavily waded into media. DreamWorks SKG live action studio eventually sold to Viacom.
- Considered Universal theme parks spinoff with backing from The Blackstone Group, a major private equity investor.