My Challenge to GE: Time for Cable News That Respects the American People

As a long-term investor in General Electric, this morning I contacted the office of the corporate secretary to the board of directors and sent a letter to be forwarded to the full board. I called for General Electric to put MSNBC up for sale, in a public auction, and to consider offers that are significantly above the current market value of MSNBC.

In the future I might well invite other citizens who might own GE stock (check your own stock and retirement portfolios) to join in a formal shareholder action.

While countless Americans feel disenfranchised and often insulted by current cable news, all shareholders have the right to support formal resolutions that would require change, and to publicly address questions to management and the board of directors at annual meetings.

I am confident that there is an enormous pool of potential viewers who would support a high-quality alternative to the current alignment of cable news, making it far more profitable, fair and respectful. I am also confident that the majority of individual and institutional investors would support dramatic change and that this initiative could draw out substantial private capital that would elevate the professional standards, integrity, quality and fairness of cable television news.

My letter to the General Electric board now follows:

I am writing as a long term General Electric investor to ask that his letter be forwarded to the full Board of Directors, and to alert the Board that I am considering a shareholder initiative, for the coming year, about the direction of MSNBC.

I am considering alternative proposals. The most likely proposal would be for GE to retain an investment bank to prepare to put MSNBC up for sale, in a public auction, with the goal of finalizing a sale if a competitive bid emerges for significantly above the current market value of MSNBC.

It is the fiduciary responsibility of management and the Board to maximize value for investors.

In my view, for various reasons, MSNBC now performs well below appropriate market value, and is therefore considerably undervalued. In my opinion, what the “market” would reward, defining the market as potential audiences and advertisers for any cable news property, would look far different than the current overall on-air alignment.

There is an enormous potential audience, far in excess of most current MSNBC programming for any of these three alternatives. First, a classic 24 hour news service in the tradition of Edward R. Murrow quality. Second, a classic cable news enterprise modeled after the original and brilliant vision of Ted Turner and CNN under his leadership. Third, a progressive 24 hour news service structured in a manner similar to Fox News, appealing to the vast audience that now feels unrepresented and even insulted by current MSNBC programs.

My proposal, and if necessary challenge, would be based on traditional principles of fiduciary responsibility of public companies, to maximize value, and traditional principles of capitalist business, currently violated not only at MSNBC but throughout the current alignment of cable news services.

For example, if Keith Olbermann’s show is dramatically more successful than others at MSNBC, shouldn’t more programming be based on a Keith Olbermann model?

If Jon Stewart, Stephen Colbert, and Bill Maher attract exponentially more viewers than current programs on MSNBC, shouldn’t more programming be based on their model?

If women compromise more than half of the total population and consumer purchasing power of the nation, why are women excluded entirely from the host structure of MSNBC rather than given at least half of the prime host positions?

Should African Americans, Hispanics and progressive Americans be almost completely excluded from the prime host positions at MSNBC, with only one exception, the most successful host, who should be emulated in other programming decisions, but is not?

The current strategy at MSNBC is far out of touch with the current market and viewer realities in the United States, leading to an audience share that is unacceptably low, advertising revenue that is correspondingly low compared to what it should be, and a property that is dramatically undervalued.

I believe retention of investment bank and announcement of a public auction to put MSNBC for sale, would attract substantial buying interest from diverse sources, would immediately create new value for GE investors, and would generate new excitement and ideas for programming and business strategy.

The Board of Directors has the capability of initiating this action, and I hereby request you do so. I certainly reserve the right to consider a formal shareholder initiative, leading to a potential vote of the full body of shareholders in calendar 2008, with investors having the right to directly raise these issues with the Board and management at the 2008 annual meeting.

Thank you for your consideration.

Respectfully,
Brent Budowsky
General Electric investor