May
01
1989

NBC: The GE Broadcasting Co.

This is the second in a series on media corporations by the editor of Left Business Observer.

RCA Building (cc photo: Alan Wu)

When it repurchased RCA, General Electric insisted that this was now the GE Building. (cc photo: Alan Wu)

In 1986, when GE bought RCA, and thereby NBC, it returned things to a state not unlike the early 1920s. The Radio Corporation of America was founded in 1919 as a joint venture of General Electric and Westinghouse; NBC itself was born in 1926 as a joint venture of RCA, GE and Westinghouse. Trustbusters forced the giants to divest RCA in 1931, and the company did nicely on its own for over four decades. But by the 1970s, it was faltering badly; though new management in the early 1980s cleaned up RCA’s act somewhat, it was still vulnerable to a takeover. GE paid $6.4 billion for RCA and swallowed it with nary a burp.

GE is an industrial and financial powerhouse with 1988 sales of $50.1 billion and profits of $ 3.4 billion. (NBC contributed 7.3 percent and 9.1 percent of these totals, respectively.) Among other things, GE makes refrigerators, light bulbs, conventional and nuclear power plants, plastics, robots, aircraft engines and medical equipment. Its highly aggressive GE Capital subsidiary offers financing for leases and leveraged buyouts; the Kidder Peabody subsidiary is a major securities broker-dealer. GE is consistently listed among the top Pentagon contractors; its detonators reside in every hydrogen bomb in the US arsenal.

Under chair John “Neutron Jack” Welch, GE has pledged that it will be No. 1 or 2 in whatever markets it competes in worldwide. If a line of business can’t shape up, it will be sold or terminated. (Welch is called Neutron Jack--like the neutron bomb-- because he makes people disappear but leaves the buildings standing.) While NBC has been the top-rated network for four years now, and is by far the most profitable of the three networks, the news division is rated last, and is the only money loser in the network pack. Since it’s unlikely NBC News will be extinguished, it must shape up.

 

GE spokesperson Ronald Reagan

GE spokesperson Ronald Reagan

Political Connections. GE—which employed Ronald Reagan as its PR spokesperson from 1954 to 1962—has long cultivated political connections. GE’S board has traded personnel with the Pentagon, and former GE president Charles “Electric Charlie” Wilson was one of the architects of the permanent war economy. “With the support of public opinion, as marshaled by the press,” Wilson said in 1951, the public must be “convinced that the only way to keep disaster away from our shores is to build America’s might.” Now, of course, GE doesn't have to marshal the press; GE owns the press, or at least a chunk of it.

Shortly after taking over NBC, GE installed Robert Wright, a veteran financial executive, its network president. Wright immediately created a stir by urging network employees—including news staffers— to contribute to the company's political action committee to help the network buy some friends in Congress. He suggested that employees who failed to contribute to the PAC were of dubious loyalty to the firm--a heavy charge, given Wright’s stated intentions of heavy layoffs. The resulting uproar from news employees and the public caused him to drop the suggestion, hut Wright left little doubt as to where he and GE stood. (Wright gave money to the Bush campaign, as did “Neutron Jack” Welch, and Cap Cities/ABC chair Thomas Murphy.)

Though it’s hard to trace a change in NBC news coverage since GE took over, who knows what the future holds? GE has taken a liking to conservative commentator John McLaughlin and his crew of right-wing loudmouths; it sponsors The McLaughlin Group and promotes it heavily. Not content with his two weekly programs, GE’s new cable network, CNBC, recently launched a nightly talkshow for McLaughlin.

Chairman Welch, in turn, is a favorite of right-wing media scourge Reed Irvine. In a cost-cutting environment, will correspondents want to keep their visibly conservative bosses happy?

From Bad to Worse? In 1987, NBC provoked a strike by putting forth a take-it—or-leave-it deal that would reserve the right to transfer operations to nonunion subsidiaries, hire over 100 temporary low—wage and benefit-free staffers on a day-to-day basis, robotize operations and rely more heavily on network pools for visuals. NBC won, and proceeded to cut the staff by 25 percent.

The president of NBC News is ex-newspaperman Michael Gartner, a deceptively folksy, how-tied Iowan. While editor of the Des Moines Register, Gartner tried to buy the paper from the Cowles chain; though he failed, his attempt put the paper “into play,” leading to its takeover by Gannett. He joined Gannett shortly thereafter, first as the hatchet man assigned to “clean house” at the newly purchased Louisville Courier-Journal, then as a consultant to USA Today. Thus he has valuable experience in closing papers and laying people off—always a plus when you’re in GE’s employ. Gartner still owns the Ames (Iowa) Tribune, notorious for its low pay scales. “He’s very good with a balance sheet,” says a former colleague.

Morale is reportedly awful at NBC News, where the workforce has been reduced from 1,400 to 1,000, and the budget cut from $300 million to about $250 million.

Global Reach. In December 1988, NBC joined with Cablevision, a large Long Island-based system, to create at least one national cable network and several regional news and sports channels. Cablevision is the 10th-largest system in the country; it owns Bravo and five regional sports networks, and produces a local news show for Long Island.

Cablevision offers another outlet for the 1992 Olympics, for which NBC paid heavily—$400 million. Recalling the flak it took for excessive commercials during the Seoul games, NBC promises not to clutter rip the airwaves next time around; instead, they hope to offer some events, probably the less popular ones, on the NBC-Cablevision channels on a pay-per-view basis. By reserving popular events for broadcast, NBC will keep its affiliates happy.

The Consumer News and Business Channel, a nonunion operation that is NBC’s first cable network, premiered in April. CNBC, in which Cablevision holds a 50 percent, share, is billed as having more of a consumer twist than its principal rival, the established but low-rent Financial News Network. How much can consumers expect from a GE-owned network featuring a nightly John McLaughlin Show? CNBC programmers told Extra! they had considered and rejected a Ralph Nader show.

Unsatisfied by merely extending its domestic reach, NBC wants the world. Last year, it bought 5 percent of a New Zealand network, 38 percent of the London-based Visinews and an option on an Australian network. Visinews, which NBC shares with Reuters (51 percent) and the BBC (11 percent), produces news reports for 84 countries. NBC not only wants the footage--Visinews is staffed by lower-paid employees than NBC—it sees Visinews’ 84 countries as virgin territory for its own news products. At first, NBC said Visinews meant no staff cutbacks, but there have been, along with demotions.

At home, to cut costs, NBC’s Chicago news bureau was merged with the local station's, and the Houston bureau has been closed. With Houston’s demise, Louisiana—not to mention Texas--is now covered from Burbank.

Cast members of Cheers

Did Cliff and Norm serve the public interest as much as NBC News?

While reporting is expensive, fluff is cheap: A new prime-time program, Yesterday, Today, Tomorrow, co-produced by the entertainment and news divisions, will include dramatic re-creations of appropriately titillating events. News can be fun! And why not--after all, Gartner has said that Cheers serves the public interest is much as NBC Nightly News. Maybe he's right.

Of course, NBC wasn’t exactly an iconoclastic wonder in news or entertainment before GE came on the scene, nor is NBC the only network that has zealously stuck it to the workforce. But GE parentage adds both zip and force to the transformation, and increases pressure on other networks to follow suit. NBC’s profitability is one of the highest of any GE business lines. If Gartner can just get the news division whipped into shape, Neutron Jack will beam with pride.

THE BOARD

GE’s board is a conservative cross-section of the power elite—corporate executives, bankers, retired cabinet members and generals, an Ivy League president and several Ivy boardmembers. There are multiple ties with the Morgan bank, Citicorp, Manufacturers Hanover. GE boardmembers also serve on several media industry boards—Harper & Row, Reuters, the Washington Post. They are well-represented in the branches of the permanent government, too: According to INFACT, three (Preston, Welch, and Sigler) belong to the Business Roundtable; three (Preston, Welch, Wriston) to the Council on Foreign Relations; two (Michelson, Wriston) to the Rand Corp. Six (Hood, Jones, Sigler, Smith, Welch, Wriston) either belong to or visit the all-male Bohemian Club, which owns the California retreat where a naked George Shultz might be seen pissing on a tree next to an equally naked Harold Brown.

OUTSIDE (not GE employees)
H. Brewster Atwater, Jr. Chair and CEO, General Mills. Other boards/memberships: Norwest, Sun Co.
Richard T. Baker. Consultant to Ernst & Whinney (accountants). High-profile Clevelandite. Other boards/memberships: International Paper, Louisiana Land & Exploration, Pacific Construction.
Charles D. Dickey. Retired chair and director, Scott Paper. Other boards/memberships: J.P. Morgan/Morgan Guaranty Trust.
Lawrence E. Fouraker. Business educator and fellow, Kennedy School of Government, Harvard. Other boards/memberships: Citicorp, Gilette, RH. Macy, The New England, Texas Eastern; Museum of Fine Arts, Boston.
Henry H. Henley, Jr. Retired chair and CEO, director, Cluett, Peabody & Co. Other boards/memberships: Bristol-Meyers, Manufacturers Hanover, Home Life, Olin, West Point-Pepperell.
Henry L. Hiliman. Chair, Hillman Company (“diversified operations and investments”). Other boards/memberships: Chemical Bank, Cummins Engine, PNC Financial; Business Council.
Gen. David C. Jones (Ret.). Retired Air Force general and former chair, Joint Chiefs of Staff. Criticized the Carter/Brown military budget as inadequate; strident promoter of the Soviet Threat. Other boards/memberships:
U.S. Air, USX.
Robert E. Mercer. Chair, Goodyear Tire & Rubber. Other boards/memberships: CPC Intl., Manufacturers Hanover.
Gertrude G. Michelson. Senior vice president, External Affairs, R.H. Macy & Co. Other boards/memberships: Chubb, Goodyear, Harper & Row, Irving Trust, Quaker Oats, Stanley Works; Columbia University, Federal Reserve Bank of New York; Markle Foundation, Helena Rubenstein Foundation, Rand Corp.
Barbara Scott Preiskel. Attorney, New York. Other boards/memberships: R.H. Macy & Co., Massachusetts Mutual, Textron, Washington Post; American Women’s Economic Development, Ford Foundation, New York City Board of Ethics, Yale University.
Lewis T. Preston. Chair, J.P. Morgan & Co/Morgan Guaranty Trust. Other boards/ memberships: Business Roundtable, Council on Foreign Relations, Federal Reserve Bank of New York.
Frank H.T. Rhodes. Geologist and president, Cornell University. Other boards/memberships: Carnegie Foundation for the Advancement of Teaching, Committee for Economic Development, Gannett Foundation, Mellon Foundation, Memorial-Sloan Kettering Cancer Center.
Andrew C. Sigler. Chair and CEO, Champion International (paper and forest products). Other boards/memberships: AMF, Bristol-Meyers, Chemical Bank; Business Roundtable.
William French Smith. Former Attorney General and partner, Gibson, Dunn & Crutcher. Former lawyer to Ronald Reagan. Other boards/memberships: American International Group, Fisher Scientific, H.F. Ahmanson, Earle M. Jorgenson Cos., Pacific Lighting, Pacific Telephone, Weintraub Entertainment; Center for Strategic and International Studies (Georgetown), Kennedy School of Government (Harvard), National Symphony, Ronald Reagan Presidential Library, University of California.
Walter B. Wriston. Retired chair and director, Citibank. Former economic adviser to Ronald Reagan. Other boards/memberships: Bechtel, Chubb, J.C. Penney, Pan Am, Pfizer, Reuters, Tandem; American Enterprise Institute, Council on Foreign Relations, Fletcher School (Tufts), Manhattan Institute, Rand Corp.

INSIDE (GE employees)
Lawrence A. Bossidy. Vice-chair and executive officer.
Edward E. Hood, Jr. Vice-chair and executive officer. Other boards/memberships: Aerospace Industries Association, National Academy of Engineering.
John F. Welch, Jr. Chair and CEO. Other boards/memberships: National Academy of Engineering; Business Roundtable, Council on Foreign Relations.