Lately, I've been hearing a lot of chatter about General Electric (NYSE: GE) and its NBC Universal asset (here's one example). Specifically, there's been talk about the future of the movie and television business and its role as a productive member of the GE portfolio. There are a lot of pundits out there who would like to see it sold off; probably a lot of investors would like that, too. Thankfully, CEO Jeffrey Immelt isn't one of them; he has consistently and steadfastly denied that NBC Universal will be offered to buyers in the near future. I hope he retains such opinion, because I definitely think GE needs NBC Universal.

Sure, GE needs to sell things from time to time, the latest example being the conglomerate's desire to dump its appliance division (Peter Cohan agreed with this logic and recently wrote a piece about the subject). But it shouldn't get rid of NBC Universal. Ever. Well, maybe there might be some compelling event in the future that would justify a sale, but I really don't see that happening. Why? Because content is valuable, and GE needs to own a piece of it.

We live in exciting times. The media is changing. New distribution paradigms, driven by digital technologies, are forming all the time. Libraries of films and television shows are going to be valuable well into the future. Think about Universal and its film library. The Mummy, Jurassic Park, E.T., The Bourne Ultimatum, Jaws...you get the picture. NBC Universal will be able to monetize all these franchises and many, many more from the library, as well as ones that have yet to be produced, via the new digital economy.

I think the fact that content is subject to the whims of the public at any given time goes a long way toward explaining why some would want GE to divest out of the content business. I can't argue that content isn't at the mercy of fickle opinion. I can argue, however, that entertainment will always be demanded and consumed by people. This doesn't sit well with those against my opinion because producing a TV show isn't like constructing a plane engine or a water-filtration system; put another way, you can't six-sigma Heroes.

But NBC Universal, like Disney (NYSE: DIS), Viacom (NYSE: VIA), and News Corp. (NYSE: NWS), is too powerful a force in media to ignore. Granted, it may not have the brand value that a Disney has, but there's nevertheless a lot of equity it can leverage in that department. Besides, it's not like the segment is doing utterly horrible business. Breaking out the latest GE annual report, I see that NBC Universal's revenues decreased 5% and operating profit increased 6% in 2007; in 2006, revenues increased 10% while operating profit decreased 6%. Granted, that's a mixed performance at best (and it should be noted that having the Olympics in 2006 and not having it in 2007 exerted an effect). But who expects content to always hit the mark? There will always be good and bad years due to the aforementioned taste thing; happening upon new franchises is a constant hit-and-miss experiment. One of the big problems with dealing with NBC Universal is its cost structure. Without a doubt, expenses for talent and programming can be very high. So, instead of selling this asset, pundits and shareholders should call upon Immelt to put pressure on Jeff Zucker, who is CEO of this segment, to aggressively cut costs. It can be done, no question in my mind. There's simply too much bloat in the entertainment business.

In the end, I think there's a strong chance GE will always keep NBC Universal in the fold. Assets such as NBC, USA Network, Sci-Fi Channel, CNBC, etc., are just too cool to simply sell (I'm not sure, though, why the company is interested in The Weather Channel, as I don't find that to be a very exciting brand). GE needs to compete with companies like Sony (NYSE: SNE), Time Warner (NYSE: TWX), and CBS (NYSE: CBS) in the digital-content age. The potential long-term upside is just too great.

Disclosure: I own shares in Disney and General Electric; positions can change at any time.