NBC Universal Fourth-Quarter Profit Rises 38%

The company’s cable networks were once again a key growth driver as Comcast's acquisition of a 51% stake is set to close next Friday.

NEW YORK - NBC Universal’s fourth-quarter financials ended 2010 on a high note.

The entertainment company's fourth-quarter segment profit amounted to $830 million, up 38 percent over the year-ago period and equaling its best quarterly operating profit since the 2004 merger with Universal that created the company in its current form. Excluding the benefit of the company's September acquisition of an additional 8 percent in NBC Universal from minority shareholder Vivendi, the quarterly profit was still up 30 percent.

NBC Universal’s quarterly revenue rose 12 percent to $4.8 billion.

The results were included Friday in the latest financials of General Electric, which will give up its majority stake in the entertainment company when cable giant Comcast’s acquisition of a 51 percent stake closes next Friday. The FCC late Thursday published its full order on the merger, which regulators had approved with conditions earlier this week.

For the full year 2010, NBC Uni’s profit was about flat at $2.26 billion. The company had started the year with a 49 percent profit decline in the first quarter amid costs for the Winter Olympics, but it made up for it as the year progressed, even hitting its highest third-quarter profit since the 2004 merger that created the firm in its current form. Management said NBC Uni's profit rose 10 percent last year when excluding  Olympics and transaction costs.

NBC Uni's revenue for 2010 rose 9 percent to $16.9 billion.

NBC Uni's quarterly and full-year revenue performance outperformed GE's overall slight revenue gain in the fourth quarter and slight decline for 2010. Its quarterly segment profit improved more than all other business units except for GE Capital.

On GE's earnings conference call Friday morning, CFO Keith Sherin once again highlighted the importance of the NBC Uni cable networks as a growth driver, citing double-digit financial growth in the latest quarter and lauding their "terrific performance." Revenue of $1.5 billion was up 15 percent as profit rose 16 percent to $740 million. Sherin lauded Bravo and Oxygen for bringing in their best years ever in ratings and profitability. While USA and Syfy have faced "some ratings pressure," USA finished as the top-rated cable channel for the fifth consecutive year, Sherin added. 

The NBC broadcast business once again was a mixed bag, although revenue increased 11 percent to $1.8 billion and segment profit was also "positive," according to Sherin who didn't provide a specific figure. Continued strength in news, strong NFL ratings and double-digit growth in local ad revenue driven by election income was partially offset by continued investments in primetime programs, Sherin said. A slide he showed also mentioned a lack of break-out hits in the fall TV season.

The film and theme parks unit posted a nine percent revenue gain in the latest quarter, and operating profit rose over 80 percent, Sherin told analysts. It had a light theatrical release schedule in the fourth quarter, but benefited from strong DVD sales of Despicable Me, which helped boost DVD unit sales by 15 percent over the year-ago quarter. Plus, the firm's theme parks brought in a record year as attendance and per-capita spending rose in the double-digit percentage range thanks in part to last year's addition of The Wizarding World of Harry Potter and a King Kong attraction. Comcast chairman and CEO Brian Roberts recently told investors that he took his family on a theme parks trip over the holidays and liked what he saw.

Analysts at Evercore Partners said in a note to investors on Friday that the NBC Uni results are good news for Comcast. "This supports our positive Comcast investment thesis and our view that the joint venture's underlying earnings power is greater than management's early indications," they wrote.

GE also mentioned the tax effect of the later-than-expected closing of the Comcast-NBC Uni deal. "While we previously anticipated the sale of our majority stake in NBC Universal would close in the fourth quarter of 2010, it is now scheduled to close in the first quarter of 2011," GE chairman and CEO Jeff Immelt said. "This delay resulted in a lower-than-expected tax rate in the fourth quarter and will lead to a higher tax rate in the first quarter. We expect this will contribute to a significantly higher GE tax rate for full-year 2011."

GE said it faces a tax charge of about $3 billion from the NBC Uni deal and expects an NBC Uni-related negative effect on its profit of about 5 cents per share in 2011.