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GE Finance Makes a Media Play

6/03/2005 8:00 PM Eastern

GE Commercial Finance is teaming up with sister company NBC Universal to share expertise and resources in evaluating and working with media properties.

The vertical partnership, unveiled in April at a symposium between the two General Electric Co. divisions, is still in its infancy. But the company has identified at least two areas where the units can work together — expanding Spanish-language television network Telemundo’s footprint in Mexico and in facilitating movie theaters’ transition to digital content delivery.

“There are a lot of strategic areas where we can work together — whether it’s a broadcaster that wants to be on NBC and also needs financing or other, more-intricate projects where we’re both dealing with the same customer base, but NBC’s coming to it more from an operations side and we’re coming to it from more of a finance side — and how can we work together to bring more of a complete solution to our customers,” GE Commercial Finance Global Media & Communications division president Robert Stefanowski said in an interview. “There really isn’t anyone that has the variety of competencies that GE does in these markets.”

AIDED MSO DEALS

GE Commercial Finance has been a player on the MSO side for years — it has helped finance several deals with Charter Communications Inc., Cebridge Connections, Wave Broadband, Patriot Media & Communications and NTL Inc. The belief is that by teaming with NBC Universal, GE Commercial Finance can tap into customers it may not have been able to before.

“It’s all about customer service — what can we provide to our customers that is unique in the marketplace, and being able to bring in our sister company with their financial resources is certainly unique,” said NBC Universal senior vice president of business development Bruce Campbell. “It’s not about leverage over our customers; it’s about bringing new products and new services.”

NBC Universal could utilize GE Commercial Finance’s contacts in the industry as well, Stefanowski said.

Stefanowski added that GE Commercial Finance has been a major player in European cable — it represents some of the largest players in the United Kingdom and Germany — and NBC delivers content through many of those providers.

“Historically we’ve hit it on a one-off basis: I’ll be in there on a Monday talking about 'Can we finance you guys,’ and NBC will be in there on a Thursday saying 'We’d really like to offer our content over your cable system,’ ” Stefanowski said. “Now we’re going jointly to these players and trying to come up with more of a packaged solution because some of it is related to each other.”

In the U.S., Stefanowski said that operators looking to move into voice services or VOD could tap into GE Commercial Finance’s resources through NBC. “We could potentially help them roll out and finance the technology to do it,” Stefanowski said.

Campbell agreed, and used the digital film content-delivery package as an example.

“That has a lot of strategic importance for our Universal film division, but it’s also a very capital-intensive project,” Campbell said. “NBC Universal alone is not going to provide the capital necessary to drive a project like that, but there’s really an opportunity for GE Commercial Finance to come in with its resources and be a part of that.”

20% MANDATE

GE Commercial Finance already has about $5 billion in loans outstanding and last year did about $4.5 billion in new financings. The company has a mandate from its parent to increase its financings by about 20% per year.

“We would hope a good chunk of that [20% increase] will come from this alliance,” Stefanowski said.

GE Commercial Finance could also potentially assist NBC Universal in its own content acquisitions down the road, he added.

“It’s nice for them to have a source that could help provide debtor equity to whatever they want to do from an acquisition perspective, or potentially help line it up,” Stefanowski said. “If it’s not something we could do all ourselves, we’ve got a bunch of private-equity contacts in the media world and the banking world and we could help facilitate that.”

September