Abstract:
On June 9, 1986, General Electric Co. acquired the Radio Corporation of America (RCA) for $6.8 billion, setting a record for the largest non-oil merger in US history. GE wanted RCA for its defense-related businesses and for its solid domestic sales of consumer goods, an area where GE was faltering. But the "jewel in the crown" was the RCA-owned television network, the National Broadcasting Company (NBC). GE was delighted with its new NBC subsidiary, which the media press had christened the "Cinderella network" for its recovery from a profound slump to become the most successful of the nation's three networks. The network's news division, however, was different. It had rarely balanced a budget and was losing at least $50 million a year. From the standpoint of GE--a company which had successfully boosted revenues by ruthlessly cutting expenses and personnel--NBC News needed simply to cut costs. This case describes the process GE underwent to make NBC a profitable venture.
Learning Objective:
This case discusses the process GE took to incorporate and make profitable its recently-acquired subsidiary company, NBC. It discusses finance, administration, and organizational culture.
