General Electric Co. expects to return about $18-billion to shareholders through share buybacks and dividend payments as a result of its deal to sell its remaining stake in NBC Universal to Comcast Corp., chief executive officer Jeff Immelt said on Wednesday.
GE, the largest U.S. conglomerate, will pay about $3.2-billion in cash taxes on the proceeds of the deal, which it expects to close next month, GE officials told investors on a conference call.
Immelt said the deal would not change GE’s capital allocation plans, which include buying back shares, raising its dividend and pursuing small acquisitions.
GE shares rose 3 per cent to $23.26 Wednesday morning on the news of the sale, which came more than a year earlier than investors had expected, sending the shares to their highest level since October 2008.
The deal is another step toward Immelt’s goal of refocusing GE on its core industrial roots, a shift that has also meant scaling back its GE Capital finance arm.
“This is a big event,” Immelt said. “Around the portfolio, the focus is on getting the industrial earnings mix up to 60, 65, 70 per cent (of total company profit) over time .... We’re always going to look at ways to do that by growing our earnings and reducing GE Capital.”
GE acquired NBC in 1986, a deal that gave it its iconic New York building at 30 Rockefeller Center, and for years company officials argued that the growing entertainment empire, which later expanded to include Universal studios, was an important part of its diversification strategy.
But GE gave up on that approach, selling 51 per cent of NBC Universal to Comcast in early 2011, after concluding that the industrial disciplines that made the company the world’s largest maker of jet engines and electric turbines did not apply to entertainment.
Indeed, the popular 30 Rock television program on NBC routinely made fun of the idea, starting when the character played by Alec Baldwin was transferred from a fictional microwave division to run NBC.
The show continued to track GE’s corporate history, eventually having the network sold to “Kabletown.”
GE executives clearly relished the glamour of owning a television studio, for instance holding annual December investor meetings at the studio where Saturday Night Live is produced.