NBC Uni sees Q2 earnings leap 13%

Best quarterly revenue performance of all GE units

NEW YORK -- NBC Universal boosted second-quarter earnings 13% and posted the best quarterly revenue performance for the period out of all General Electric segments as its cable networks once again provided the key growth engine.

The broadcast operations also improved though amid a stronger-than-expected upfront and scatter advertising revenue gains of 20%-plus in a rebounding market, as did the film arm, which benefitted from the performance of "Get Him To The Greek."

The latest figures must be encouraging for management at cable giant Comcast Corp., which is looking to acquire a controlling 51% stake in the GE entertainment arm and whose executives have previously lauded their deal timing amid an advertising rebound that has benefitted NBC Uni and others. GE management signalled Friday that the regulatory review of the deal remains on track to conclude by the end of the year.

NBC Uni's second-quarter profit hit $607 million, the company reported Friday. Earnings at most other GE divisions rose at a stronger pace, but the entertainment unit outperformed the conglomerate's 8% growth rate (to $5.04 billion) for all its segments combined.

Revenue at NBC Uni rose 5% in the latest quarter to $3.75 billion, the only GE operating unit to grow besides Home & Business Solutions, which was up 4%.
Total GE revenue in the quarter fell 4% to $37.4 billion.

"GE's economic environment continues to improve," GE Chairman and CEO Jeff Immelt said early Friday. He also lauded NBC Uni's "good revenue and profit growth."

However, for the first half of 2010, NBC Uni's profit is down 13% at $806 million due to a weak first quarter, which had seen a 49% decrease driven by the cost of the Winter Olympics. NBC Uni's revenue at the half-year mark is up 14% at $8.07 billion.

Here some highlights from GE's earnings call on Friday:
- GE vice chairman and CFO Keith Sherin lauded NBC Uni CEO Jeff Zucker and his team for bringing in a "pretty solid" quarter.

- Cable networks once again were the key growth driver with revenue up 7% and profit up 10% driven by the entertainment channels. USA, Bravo, Oxygen and CNBC (profit up 9%) got shoutouts from Sherin. 

- He said NBC Uni's broadcast business had "a pretty good quarter" as revenue rose 1% and profit 6%. The scatter advertising market for current ad buys was up "over 20%," and the firm's TV stations were up 25% in scatter after a 15% gain in the first quarter.
While he acknowledged ratings challenges for may broadcast networks, Sherin lauded NBC's strong start to the summer with "America's Got Talent." A slide he showed also mentioned that Jay Leno "continues as #1 in late night."

- Sherin also called the upfront ad market a major highlight for NBC, citing an 18% jump in dollars booked - about half of it driven by higher sellout and the other half by higher prices. He said those results were better than expected and particularly lauded NBC development work for next season as having been "well received."

- Film and theme parks results were also "positive" in the second quarter, Sherin said. He mentioned a 6% revenue gain and a more than $40 million improvement to the bottom line. The film arm had a better quarter thanks to "Get Him To the Greek." Sherin also lauded the strong opening this quarter of "Despicable Me."
Parks benefitted from single-digit growth in attendance and better spending, but profit was down slightly due to the costs for the opening of the "Harry Potter World" attraction in Orlando and "King Kong 360 3-D" in Hollywood. Both are off to a "phantastic" start, according to Sherin.

- Hulu and other digital assets along with digital ad revenue also continue to grow.

- The regulatory review of the Comcast deal is progressing "as expected," Sherin said during his prepared remarks. At the end of the call, an analyst asked if it will indeed close by year's end, and Sherin admitted that he hates to predict regulatory processes because the company can't control them. "We don't see anything today that changes what we have said in the past," he said though and emphasized that GE/NBC Uni and Comcast are "in active dialogue" with regulators and "will work like crazy" to finish the process this year.

Gimme Credit debt analyst Dave Novosel on Friday also said in a report that a final regulatory decision should come late in 2010: "Assuming no further delays, the ruling should come before the end of the year," he wrote.