January 20, 2022

Advertising: GE Capital Puts On a Lending Roadshow

GE Capital this week is embarking on an elaborate advertising campaign with Slate.com featuring a six-month roadshow across the United States meant to stimulate its lending to midsize businesses.

According to research done by the National Center for the Middle Market at Ohio State University, businesses with revenue of $10 million to $1 billion account for more than 43 million jobs in the United States and one-third of the national private sector gross domestic product. GE Capital underwrites the center, founded in 2011. Steven Winoker, who follows General Electric for Sanford C. Bernstein Company, called lending to middle-market businesses a “profitable business and a core business” for GE Capital, adding that it is “probably better at originating this kind of business than its competitors because of its industrial heritage.”

According to Mr. Winoker, GE Capital generated 47 percent of total earnings for General Electric last year, up from 28 percent in 2009; he also said commercial lending and leasing — a large part of which is to midsize businesses — was responsible for about a third of GE Capital’s profit last year.

Mr. Winoker said G.E. generally has a “more advanced view of advertising and marketing and is more aggressive in its approach to marketing than most industrial companies, from its heritage of owning” NBC Universal, whose sale to Comcast was completed last year.

One factor behind the campaign suggested Nicholas P. Heymann, who follows G.E. for William Blair Company, are possible changes in banking regulations resulting from the Dodd-Frank law’s stress test for 2013 that could limit major banks’ ability to lend to smaller businesses.

“Some of GE Capital’s highest returns on investment come from its middle-market lending portfolio,” he said. “If there are changes from a regulatory standpoint, GE Capital wants to be optimally positioned to take advantage of any void that may be created from restricted money center bank lending.”

The campaign — which began Monday in Kansas City, Mo., and is considered native advertising, or content sponsored by advertisers — is the most elaborate initiative created by SlateCustom, the custom-publishing arm of Slate.com, the online magazine. Previous native advertising on Slate.com included a campaign by the Dairy Council, which looked at the impact of last year’s drought on dairy farmers, and distribution of a video promoting Coca-Cola’s anti-obesity campaign.

Ian Forrest, vice president of global marketing at GE Capital, said his company had run traditional banner advertising on Slate.com for the last two years. “The performance worked really well against our core target audience — middle-market, C-level executives,” he said.

He also said the new roadshow, a collaboration jointly developed by GE Capital and Slate.com, was designed to provide a “holistic, 360-degree view of the middle-market opportunity,” and also to “touch customers, prospective customers, employees and policy makers, to start a dialogue and discussion.” Another goal, he added, is to motivate legislators to pass new regulations in support of middle-market business growth.

“The Roadshow for Growth” entails a bus tour through various cities across the United States. After Kansas City, it moves on to St. Louis, Indianapolis, Chicago, Detroit, Cleveland, Pittsburgh, New York, Dallas, Atlanta and Los Angeles, among others. It will end in Columbus, Ohio, in late October.

At each stop, the roadshow will host different events, like town hall discussions, conversations with the city’s mayor, and visits with middle-market businesses. In Kansas City on Monday, for example, there was a meeting with Mayor Sly James and a town-hall session with GE Capital employees, while the Chicago visit on Thursday is scheduled to include a discussion moderated by Jacob Weisberg, chairman of the Slate Group, and featuring Mayor Rahm Emanuel and economist Austan Goolsbee, chairman of the Council of Economic Advisers during the first term of the Obama administration.

Daily blog posts, video and commentary on the roadshow will be published on a special Web site, roadshow.slate.com. The Web site is being promoted as a “sponsored section” on slate.com.

Lindsay Nelson, vice president of integrated programs for Slate.com, said her company had gone to “great lengths” to make it clear to readers that the roadshow’s online section is “a special section brought to you by GE Capital, SlateCustom, National Center for the Middle Market,” via a note on the site and a separate pop-up message.

This disclaimer is no doubt meant to avoid controversy like that generated in January when The Atlantic ran a story on its Web site about the Church of Scientology that resembled its regular content, though it was labeled “sponsored content.”

Mr. Forrest said GE Capital would promote the roadshow on Slate.com, various G.E. Web sites, and through digital advertising on Web sites of Yahoo Finance and Bloomberg. He said the total budget for the roadshow would be between $1.5 million and $2 million.

According to Kantar Media, GE Capital’s advertising expenditures in the past five years ranged from a low of $4.3 million in 2008 to a high of $58 million in 2010; last year’s spending was $9.3 million, almost $2 million of which was for Internet display advertising.

Loren Ghiglione, a professor at Northwestern University’s Medill School of Journalism, said the collaboration between Slate.com and GE Capital raises the question of “what it will do to the reputation of Slate.”

The program’s aim to motivate legislators to pass new regulations supporting middle-market businesses “sounds like lobbying to me. I don’t think that journalism and lobbying are the same thing,” he said.

Sharmila C. Chatterjee, a senior lecturer at the M.I.T. Sloan School of Management who studies business-to-business marketing, called the roadshow a “very nice way for GE Capital to connect with customers, establish credibility and gain their trust, three very important things in the day of information bombardment.”

She warned, though, that if the initiative is “hijacked by interest groups and gets politicized, the goal will not be fulfilled.”

Article source: http://www.nytimes.com/2013/05/08/business/media/ge-capital-puts-on-a-lending-roadshow.html?partner=rss&emc=rss

Media Decoder Blog: Comcast Buys Rest of NBC in Early Sale

The G.E. sign was not lit hours after Comcast's purchase announcement. The G.E. sign was not lit hours after Comcast’s purchase announcement.

8:53 p.m. | Updated Comcast gave NBCUniversal a $16.7 billion vote of confidence on Tuesday, agreeing to pay that sum to acquire General Electric’s remaining 49 percent stake in the entertainment company. The deal accelerated a sales process that was expected to take several more years.

Brian Roberts, chief executive of Comcast, said the acquisition, which will be completed by the end of March, underscored a commitment to NBCUniversal and its highly profitable cable channels, expanding theme parks and the resurgent NBC broadcast network.

“We always thought it was a strong possibility that we’d some day own 100 percent,” Mr. Roberts said in a telephone interview.

He added that the rapidly changing television business and the growing necessity of owning content as well as the delivery systems sped up the decision. “It’s been a very smooth couple of years, and the content continues to get more valuable with new revenue streams,” he said.

Comcast also said that NBCUniversal would buy the NBC studios and offices at 30 Rockefeller Center, as well as the CNBC headquarters in Englewood Cliffs, N.J. Those transactions will cost about $1.4 billion.

Mr. Roberts called the 30 Rockefeller Center offices “iconic” and said it would have been “expensive to replicate” studios elsewhere for the “Today” show, “Saturday Night Live,” “Late Night With Jimmy Fallon” and other programs produced there. “We’re proud to be associated with it,” Mr. Roberts said of the building.

With the office space comes naming rights for the building, according to a General Electric spokeswoman. So it is possible that one of New York’s most famous landmarks, with its giant red G.E. sign, could soon be displaying a Comcast sign instead.

When asked about a possible logo swap on the building, owned by Tishman Speyer, Mr. Roberts told CNBC, that is “not something we’re focused on talking about today.” Nevertheless, the sale was visible in a prominent way Tuesday night: the G.E. letters, which have adorned the top of 30 Rock for several decades, were not illuminated for an hour after sunset. But the lights flickered back on later in the evening.

Comcast, with a conservative, low-profile culture, had clashed with the G.E. approach, according to employees and executives in television. Comcast moved NBCUniversal’s executive offices from the 52nd floor to the 51st floor — less opulent space that features smaller executive offices and a cozy communal coffee room instead of General Electric’s lavish executive dining room.

Comcast took control of NBCUniversal in early 2011 by acquiring 51 percent of the media company from General Electric. The structure of the deal gave Comcast the option of buying out G.E. in a three-and-a-half to seven-year time frame. In part because of the clash in corporate cultures, television executives said, both sides were eager to accelerate the sale.

Price was also a factor. Mr. Roberts said he believed the stake would have cost more had Comcast waited. Also, he pointed to the company’s strong fourth-quarter earnings to be released late Tuesday afternoon, which put it in a strong position to complete the sale.

Comcast reported a near record-breaking year with $20 billion in operating cash flow in the fiscal year 2012. In the three months that ended Dec. 31, Comcast’s cash flow increased 7.3 percent to $5.3 billion. Revenue at NBCUniversal grew 4.8 percent to $6 billion.

“We’ve had two years to make the transition and to make the investments that we believe will continue to take off,” Mr. Roberts said.

The transactions with General Electric will be largely financed with $11.4 billion of cash on hand, $4 billion of subsidiary senior unsecured notes to be issued to G.E. and a $2 billion in borrowings.

Even with the investment in NBCUniversal, Comcast said it would increase its dividend by 20 percent to 78 cents a share and buy back $2 billion in stock in 2013.

When it acquired the 51 percent stake two years ago, Comcast committed to paying about $6.5 billion in cash and contributed all of its cable channels, including E! and some regional sports networks, to the newly established NBCUniversal joint venture. Those channels were valued at $7.25 billion.

The transaction made Comcast, the single biggest cable provider in the United States, one of the biggest owners of cable channels, too. NBCUniversal operates the NBC broadcast network, 10 local NBC stations, USA, Bravo, Syfy, E!, MSNBC, CNBC, the NBC Sports Network, Telemundo, Universal Pictures, Universal Studios, and a long list of other media brands.

Mr. Roberts and Michael J. Angelakis, vice chairman and chief financial officer for the Comcast Corporation, led the negotiations that began last year with Jeffrey R. Immelt, chief executive of General Electric, and Keith Sharon, the company’s chief financial officer. JPMorgan Chase, Goldman Sachs, Centerview Partners and CBRE provided financial and strategic advice.

The sale ends a long relationship between General Electric and NBC that goes back before the founding days of television. In 1926, the Radio Corporation of America created the NBC network. General Electric owned R.C.A. until 1930. It regained control of R.C.A., including NBC, in 1986, in a deal worth $6.4 billion at the time.

In a slide show on the company’s “GE Reports” Web site titled “It’s a Wrap: GE, NBC Part Ways, Together They’ve Changed History,” G.E. said the deal with Comcast “caps a historic, centurylong journey for the two companies that gave birth to modern home entertainment.”

Mr. Immelt has said that NBCUniversal did not mesh with G.E.’s core industrial businesses. That became even more apparent when the company became a minority stakeholder with no control over how the business was run, according to a person briefed on G.E.’s thinking who could not discuss private conversations publicly.

“By adding significant new capital to our balanced capital allocation plan, we can accelerate our share buyback plans while investing in growth in our core businesses,” Mr. Immelt said in a statement. He added: “For nearly 30 years, NBC — and later NBCUniversal — has been a great business for G.E. and our investors.”

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/12/comcast-buying-g-e-s-stake-in-nbcuniversal-for-16-7-billion/?partner=rss&emc=rss

Economix Blog: Charles Duhigg Responds to Readers on Apple and the iEconomy

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.Thomas Lee/Bloomberg NewsA production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees.

7:36 p.m. | Updated Charles Duhigg has provided answers to select reader questions. See the comments, below.

On the front page of Sunday’s newspaper, Charles Duhigg and Keith Bradsher published the first of a series of articles on The iEconomy, examining the challenges posed by increasingly globalized high-tech industries. In a deep look inside the economics of Apple’s manufacturing, Mr. Duhigg and Mr. Bradsher described the powerful incentives that first drew Apple’s assembly work overseas, and the subsequent pressure that encouraged related jobs to follow suit:

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the more than 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

The article was accompanied online by an animated graphic detailing the economic pressures underlying the process.

But the problem, the article noted, isn’t unique to the maker of the iPhone and the iPad:

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

The article, which followed months of reporting, also arrived shortly after Apple released a list of its major suppliers for the first time, and weeks after an episode of the public radio program “This American Life” focused intently on labor conditions at an Apple supplier in China.

Twitter users had lots to say, from the admiring:

To the skeptical:

At Slate, Matthew Yglesias took a distinctive view:

The more interesting question, to me, is why we don’t hear more about the possibility of letting the workers come to America. At the same time that a lot of companies seem to want to move certain kinds of production to foreign countries to take advantage of their labor forces, an awful lot of people seem to want to move to the United States.

What questions do you have about the iEconomy and Apple’s role in it? Submit them in the comments field below. Charles Duhigg will respond to a selection later on Monday.

Article source: http://feeds.nytimes.com/click.phdo?i=45522b5334979bc7d07d472b828453cf

The iEconomy: Apple, America and a Squeezed Middle Class

But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost every electronics designer relies upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

“If it’s the pinnacle of capitalism, we should be worried.”

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

David Barboza, Peter Lattman and Catherine Rampell contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=2b0c3b028c673de0a8f327a348c14fe5

DealBook: Capital One to Buy ING’s Online Bank for $9 Billion

Peter Foley/Bloomberg News

9:54 p.m. | Updated

Capital One Financial agreed on Thursday to buy the ING Group’s online banking unit in the United States for $9 billion in cash and stock, one of its biggest efforts yet to add to offerings beyond credit cards and other consumer lending.

Under the terms of the deal, Capital One will pay $6.2 billion in cash and issue $2.8 billion worth of new shares to ING, giving it a 9.9 percent stake. ING will also have the right to name a director on Capital One’s board.

Long known for cheeky credit card ads asking customers “What’s in your wallet?” Capital One is seeking to build up a national banking franchise. Buying ING Direct USA, one of the best-known online banks in the country, will help give Capital One a broader platform and a huge source of lower-cost funds.

Currently the eighth-biggest bank in the country by deposits, Capital One will rise to the fifth-biggest through the deal.

“The acquisition of ING Direct is a game-changing transaction that delivers attractive deal economics immediately and compelling long-term strategic value,” Richard D. Fairbank, Capital One’s chairman and chief executive, said in a statement.

ING was reluctant to shed its online banking business, one of its crown jewels and a leader in the expanding direct banking industry. But it was forced to sell off the unit by the European Commission as part of the bank’s 10 billion euro bailout in 2008.

“Although I regret that ING Direct USA will no longer be a part of ING, I am very pleased that we have found in Capital One a good home for our customers and employees, who are very important to the continued success of the ING Direct USA Business,” Jan H. M. Hommen, ING’s chief executive, said in a statement.

Capital One emerged the winner of a relatively crowded auction, one that also included General Electric’s GE Capital and the CIT Group, according to people briefed on the matter. One of the reasons Capital One prevailed was its willingness to shoulder more than $60 billion worth of mortgages and mortgage-linked securities.

In order to help pay for the transaction, Capital One said it planned to raise about $2 billion from a sale of new shares and $3.7 billion from selling new debt.

But the bank insists that the deal will pay for itself quickly. Capital One expects to reap $90 million in savings from combining back-end systems and staff, as well as $200 million from lowering funding costs. The transaction will also add to Capital One’s earnings per share beginning next year.

Shares in Capital One began rising on Thursday afternoon after Dow Jones reported news of the impending deal, closing up $1.13, or 2.4 percent, at $49.

The deal is expected to close by the end of the year or early next year, pending regulatory approval.

Capital One was advised by Morgan Stanley, Barclays Capital, Centerview Partners and the law firms Mayer Brown, Loyens Loeff and Wachtell, Lipton, Rosen Katz. ING Direct was advised by Deutsche Bank and JPMorgan Chase.

Article source: http://feeds.nytimes.com/click.phdo?i=2a0961d0223a19c2bea74547dc904901