Acquisition of RCA/NBC by GE
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The recent announcement of the merger between America OnLine (AOL) and Time Warner has returned interest to the issue of mergers and acquisitions and whether mergers are always in the best interest of the public. The acquisition of Time Warner by AOL is thought to provide AOL with much-needed content, and access to Time Warner's cable systems throughout the country. Time Warner, on the other hand, gains access to AOL's Internet portal. Such synergies are generally behind mergers and acquisitions, but few acquisitions have caused the level of consternation and concern as the acquisition of RCA by General Electric in the early 1980s. At issue was not the top-level brands (General Electric and RCA), but the fact that RCA already owned NBC, which had a formidable news organization that helped shape public opinion. This research examines the acquisition of RCA by General Electric, and considers the effects of the acquisition on NBC and specifically the news organization at NBC.When GE acquired RCA in 1986, it was a continuation--after a long break--in the joint operation of the two companies. General Electric helped to create the Radio Corporation of America in 1919 under the influence of Franklin Roosevelt (then Assistant Secretary of the Navy) to help ensure that the United States maintained a leadership role in communications. General Electric was forced to spin off its RCA holdings in 1932, but maintained a significant stock interest in the c
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k, was launched in 1989 as the Consumer News and Business Channel and originally featured tips on how to invest and spend money. There was no stock ticker at the bottom of the screen. NBC acquired Tempo, CNBC's parent, which gave it access to the network, and later bought the Financial News Network with a 30 million subscriber base in 1991. In this quiet way, NBC thus gained access to the cable news market (Gunther, 1999, p. 139).
By the late 1990s, CNBC was well on its way to being the most profitable network in the NBC family (the programming costs at the broadcast NBC network are expected to reduce its profitability below that of CNBC in the 2000 to 2004 period) (Gunther, 1999, p. 139). CNBC is recognized for its focus on business news (an agreement with Dow Jones gives the network access to Wall Street Journal and Barron's reporters), but it is also growing in popularity among news viewers, although it has not yet surpassed Ted Turner's CNN.
In addition to CNBC, GE also owns and operates MSNBC, a cable and Internet venture with Microsoft. MSNBC has strong potential, but is competing in the highly competitive Internet segment where competition for viewers and advertisers is intense and expensive.
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Approximate Word count = 1362
Approximate Pages = 5 (250 words per page)
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