Comcast CEO: NBC Turnaround Is Happening ‘Faster’ Than Anticipated

The turnaround of NBC’s broadcast business is happening faster than expected, Brian Roberts, chairman and CEO of NBCUniversal parent company Comcast, said Tuesday while participating in the cable giant’s quarterly earnings conference call.

Said Roberts: “We feel great about the improvements at NBCUniversal, which have significantly exceeded our expectations.” And he added that “the turnaround in broadcast is happening even faster than we had anticipated.” He cited improving NBC ratings momentum as one key reason before management also mentioned rising retransmission consent revenue. Hit shows have included The Voice and The Blacklist.

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Executives on Tuesday also said that film unit production spending would rise in 2014 and touted the outlook for the Sochi Winter Olympics, which start next month.

Calling NBCUniversal a “wonderful” business, Roberts said Comcast’s decision last year to take full ownership of the entertainment company was the firm’s “single most important” decision of 2013. (Comcast acquired GE’s 49 percent stake in NBCUniversal early last year.)

He called the Sochi Olympics “an incredible opportunity” to start off the year strongly. Among other things, he touted the roughly 500 hours of coverage planned to air on NBC, NBC Sports, USA, MSNBC and CNBC, as well as the most comprehensive online and digital coverage ever. Ad sales hit an all-time record for the Winter Games, Roberts said.

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NBCUniversal CEO Steve Burke later on the call said his team sees “more upside” for the firm’s financials across all units even though operating cash flow was already up strongly when Comcast decided to buy full control of the entertainment company.

“Broadcast television has a long way to go,” said Burke. “We now have the ratings,” but there is a lag between audience growth and advertising sales improvements.

“We feel there is a monetization gap between how we are doing in terms of ratings and box office and the amount of operating cash flow we are generating,” Burke explained.

He added that Universal has already been more strategic with its film portfolio and saw the financial benefits in 2013. Roberts touted a record box-office year, but emphasized the firm remains more focused on profitability, which was also up for the year.

The earnings call came after the entertainment firm had earlier in the day posted higher fourth-quarter financials. At its film unit, strong home entertainment sales of Despicable Me 2 outweighed lower box-office results in the latest quarter.

However, management admitted during the call that film expenses will rise in 2014. Comcast CFO Michael Angelakis said 2013 benefited from lower film spending on the 2014 slate, meaning the current year will see “more normalized spending” on the 2015 slate. Roberts said the 2015 slate “appears to be fantastically exciting,” saying new Universal Pictures boss Jeff Shell is “excited” to be at the studio.

Burke touted such 2015 releases as Jurassic Park 4, Fast & Furious 7, Despicable Me spinoff Minions and Fifty Shades of Grey, saying the higher 2014 spending is in support of “what should be a very strong year” next year.

For the full year 2013, NBCUniversal reported that broadcast revenue fell 13.2 percent to $7.1 billion, or rose 5.4 percent when excluding the Super Bowl and Summer Olympics in 2012. Full-year operating cash flow dropped 3.6 percent. But when excluding the Olympics boost in 2012, it jumped 44.9 percent in 2013, with the company citing “higher revenue and a modest decrease in programming and production costs.”

Comcast management on Tuesday declined to comment on reports that Comcast could get New York City, New England and North Carolina cable systems if Charter Communications succeeds in acquiring Time Warner Cable. Jason Armstrong, a former analyst who recently joined Comcast as head of investor relations, said the firm wouldn’t comment on consolidation.

Bloomberg News reported that Comcast and Charter have a framework agreement for what the biggest U.S. cable operator would pay, pegged to the final price that Charter negotiates if it does reach a deal. Charter recently offered $61.3 billion, or $132.50 per share, but TW Cable rejected the price tag as too small.

Also on Tuesday’s call, Comcast executives said that video subscriber trends continue to improve. And while the company had a video subscriber gain in the fourth quarter after 26 quarters of losses, they said investors shouldn’t expect full-year subscriber growth near-term.

Asked about Comcast’s ownership of both content businesses and cable systems at a time of carriage fee disputes, Roberts said “we love both businesses.” Understanding both is easier when one owns both, and continued synergies will be visible again during the Sochi Olympics, he said. “I like that balance that the company has,” Roberts concluded.

Email: Georg.Szalai@THR.com
Twitter: @georgszalai