NBC Universal posts mixed Q1
Company loses $223 mil on Olympics, revenue up
NEW YORK -- The Olympics and disappointing boxoffice results for such releases as "Green Zone" were a drag on NBC Universal's bottom line in the first quarter. However, top executives of controlling shareholder General Electric on Friday touted NBC ratings improvements, strengthening advertising market trends and continued cable network growth.
NBC Uni recorded a 49% year-over-year decline in its first-quarter profit to $199 million as the Winter Olympics put a major drag on the bottom line.
But industrial conglomerate GE, which currently controls 80% of NBC Uni, on Friday also reported a 23% quarterly revenue improvement to $4.32 billion for its entertainment arm.
Olympics broadcasts accounted for $782 million in revenue and a $223 million loss for NBC Uni (or $194 million at the GE level). The company had reported $684 million in Winter Olympics revenue for the first quarter of 2006. Olympics ratings were up 14% this year over the Torino Games.
On a conference call, GE CFO Keith Sherin said excluding the Olympics, NBC Uni's revenue would have been unchanged in the latest quarter, and profit would have been up 1%. He pointed out that the Olympics losses ended up slightly lower than the worst-case projections on solid ad sales. He also lauded NBC Uni CEO Jeff Zucker and NBC sports head Dick Ebersol for doing "a great job."
GE chairman and CEO Jeff Immelt reiterated that GE expects NBC Uni's bottom line for the full year 2010 to be down, even though things should look up from here. "Our worst quarter is behind us," he said. "Cable continues to be strong. The ad markets...have real strength. Film remains challenged, but we should see growth at NBCU for the balance of the year."
In the first quarter, cable networks remained the big growth engine at NBC Uni thanks to strong ratings across the channel portfolio. Cable networks revenue climbed 3% to $1.2 billion, and profit rose 4%, led by entertainment channels.
USA had its 15th straight quarter as the top network, Bravo posted its 18th consecutive quarter of ratings growth, and Oxygen had its highest ratings quarter ever, according to Sherin.
The broadcast business results were driven by the Olympics with revenue up to $2 billion, but profit down in the first quarter. Sherin highlighted "some really good recovery" in the advertising market, with local ad revenue up 15% in the latest period. He also said scatter advertising is up over 20% in both cable and the broadcast network, boding well for the nearing upfront ad market. "The ad market outlook continues to improve," the GE CFO summarized at a later point.
Sherin also pointed to a 45% ratings improvement in the 10pm time slot amid Jay Leno's move back to his lead late-night spot, a schedule shuffle made easier with the promotional platform of the Olympics. "Lots of progress heading into the mid-May upfront here," Sherin concluded about NBC ratings trends.
Finally, NBC Uni's film and theme parks unit had a flat operating profit in the first quarter on a 14% revenue improvement. Sherin highlighted disappointing boxoffice results, which "did fall short of our expectations, but that was partially offset by less second-quarter pre-promotion for movies." Sherin didn't mention any specific films, but Universal key releases in the quarter included "Green Zone" and "The Wolf Man." He also touted stronger-than-expected home video trends with 5 million units sold led by "Couples Retreat." Theme parks saw mixed trends with weaker attendance, but higher per-capita spending.
Sherin's overall take on the NBC Uni results: "Jeff Zucker and the team accomplished a lot this quarter."
Cable giant Comcast Corp. plans to acquire a controlling stake in NBC Uni later this year. Immelt said on Friday's call that the two sides continue to focus on getting the deal through the regulatory process. He wouldn't predict how long the process could take, but said it is progressing "in an orderly way."
GE overall reported a first-quarter profit from continuing operations of $2.3 billion, down 18%, on Friday. Revenue fell 5% to $36.6 billion.
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