NBC Universal posts strong cable, film results

Q3 profit drops 15% as year-ago benefited from a deal.

NEW YORK - General Electric CEO Jeff Immelt said Friday that his company continues to expect to close the sale of a 51% stake in NBC Universal to cable giant Comcast by year-end. He made the comment after NBC Uni reported third-quarter financials that were stronger on an underlying basis than they looked on first glance.

Its cable networks once again were a key engine of performance, and its film and theme park operations also posted gains, while the broadcast business took a bottom line hit due to primetime program investments.

NBC Uni's third-quarter segment profit amounted to $625 million, down 15% over the year-ago period. The decline made it the weakest performer as the conglomerate reported 11% growth to $4.7 billion for all its segments combined, driven by a rebound at GE Capital.

However, the year-ago period included a $137 million positive impact in the year-ago period on the bottom line from a transaction that NBC Uni struck with Walt Disney and Hearst that merged cable network businesses A&E and Lifetime. NBC Uni's profit in the latest period would have been up 5% when adjusting for this year-ago benefit, GE vice chairman and CFO Keith Sherin said in a conference call.

When excluding the year-ago deal benefit, the latest quarter also meant the best third-quarter profit from operations that the entertainment company has reported since its merger with Universal in 2004, a spokeswoman highlighted.

Revenue at NBC Uni was virtually unchanged from the year-ago quarter at $4.1 billion, outperforming the rest of the company as other units declined and total GE revenue dropped 5% to $35.9 billion.

Sherin on a call with analysts once again touted the strong performance of the NBC Uni cable networks, which boosted its revenue 8% to $1.2 billion and profit by more than 20%.

Broadcast revenue declined 2% to $1.4 billion despite advertising gains, while profit was down about $80 million due to "significant" investments in primetime programming, Sherin said.

Scatter advertising rose 20%-plus at NBC and cable networks, and fourth-quarter trends continue to pace up in the double-digit percentage range over the upfront ad market, he added.

The company's film and theme parks unit had a strong third-quarter outing thanks to the strong performance of "Despicable Me" and a record result in parks driven by new Harry Potter and King Kong rides. Quarterly film operating profit was up 57%, while theme parks operating profit rose 59%. Specific profit figures were not disclosed.

For the first three quarters of 2010, NBC Uni's profit is down 14% despite a 9% revenue improvement. This is a result of a weak first quarter, which had seen a 49% profit decrease driven by the cost of the Winter Olympics.

In a memo to staff, NBC Uni president and CEO Jeff Zucker, who has announced his departure once the Comcast deal closes, called the third-quarter results "truly a record performance."

He wrote: "Given that the economy, although improving, is still far from robust, these are excellent results driven by superior execution throughout our operations."

Zucker lauded NBC for being tied for no. 2 through the first three weeks of the new TV season, up 4% from the year-ago period.

He also highlighted that USA was the no. 1 cable entertainment network for the 17th quarter in a row, that Bravo had its best quarter ever and has 20 consecutive quarters of ratings growth and that CNBC posted increases in both revenue and operating profit.

Zucker also told staff that he expects the Comcast deal to close by year's end, but said the timing should be clearer next month. The FCC's current informal merger review clock is believed to run out on Nov. 29, but a spokeswoman wouldn't give timing guidance.

A Comcast spokeswoman said the cable giant continues to expect to receive regulatory clearances by year's end.