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GE may be Games’ big winner

Times Staff Writer

General Electric Co. is poised to capture some gold from the 2008 Olympic Games in Beijing.

The Fairfield, Conn.-based company, parent of NBC Universal, said Monday that the Olympics would generate at least $1.7 billion in revenue from advertising time and sales of GE industrial products that have been incorporated into Olympic venues. Profit could be more than $150 million.

In the last few years, Chief Executive Jeffrey Immelt has faced criticism for keeping NBC Universal part of GE’s sprawling empire. But for GE, owning NBC Universal has never been just about producing sitcoms, newscasts or movies.

NBC Universal’s coverage of the Games has helped GE pry open the potentially vast Chinese market for sales of its lighting, medical equipment, security systems, water treatment technology and wind turbines.

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“China is a closed society, so NBC is essentially opening doors for the other parts of GE,” said analyst Rashid Dahod of Argus Research Corp. “For those reasons, the Olympics are working out quite well for GE.”

NBC Universal is on track to collect more than $1 billion for its commercial time during an unprecedented 3,600 hours of coverage on NBC, its cable channels including MSNBC and USA Network, and website.

Friday’s opening ceremony drew an average of 35 million viewers during the 3 1/2 -hour event. And Sunday night’s telecast, including high-profile swimming and gymnastics events, lured an average of 32 million viewers -- 6 million more than the third night of the 2004 Games in Athens. Sunday’s audience matched that of another major TV event, the May finale of “American Idol.”

“The ratings have been generally higher than what people thought,” said David Scardino, entertainment specialist for the Santa Monica advertising firm RPA.

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“There is certainly a core audience for the Olympics, but there also is a tremendous interest in China,” Scardino said. “Besides that, the economy is lousy, gas is too expensive and people are taking fewer vacations. That might make them amenable to stay home and watch something where they can root for the athletes.”

If the strong ratings stick, NBC could sell even more ads.

“We expect a profit here, but it’s still too early to tell exactly where it is going to be,” NBC Sports spokesman Mike McCarley said.

NBC Universal paid $894 million for the U.S. television broadcast rights. It is spending about $100 million on production costs, which include high-definition cameras and wages for 2,900 people -- half of them Chinese residents.

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The Olympics have been a moneymaker for NBC for years, with some Games, such as Atlanta’s 1996 event, generating $75 million.

Meanwhile, GE has sold more than $700 million worth of products, including security equipment for a Beijing subway line and an airport terminal, medical equipment at the Olympic Village General Hospital and 120 wind turbines north of Beijing.

GE declined to say exactly how much profit it expects the Games to generate. But its infrastructure businesses typically produce more than 15% profit margin, according to a person familiar with the company’s finances. At that rate, GE should reap about $120 million in profit from those product sales.

The Olympics are “just one of the many benefits of having NBC as part of the GE portfolio,” GE spokesman Russell Wilkerson said.

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Investors have punished GE stock this year after a disappointing first quarter that saw $4.3 billion in earnings on revenue of $42.2 billion. But shares have risen since mid-July when the company posted second-quarter profit of $5.07 billion on revenue of $46.9 billion.

Shares rose 31 cents Monday to $29.95.

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meg.james@latimes.com

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