NBCUniversal Posts Higher Fourth-Quarter, Full-Year Profits

Steve Burke - PR Headshot - P - 2011

UPDATED: At the film unit, strong home entertainment sales of "Despicable Me 2" outweighed lower box-office results in the latest quarter.

Cable giant Comcast on Tuesday reported higher fourth-quarter and full-year profitability figures for its entertainment arm NBCUniversal.

The entertainment company, headed by CEO Steve Burke, recorded higher operating cash flow, the profitability metric it uses, than in the year-ago period as its film unit saw strong home entertainment sales of Despicable Me 2 outweigh lower box-office results in the latest quarter.

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Comcast, led by chairman and CEO Brian Roberts, last year acquired full control of NBCUniversal by buying out a 49 percent stake held by General Electric. The cable giant on Tuesday announced increases in its dividend, by 15 percent to 90 cents per-share on an annualized basis, and stock buyback authorization to $7.5 billion, including $3 billion this year.

As pre-announced earlier this year, Comcast on Tuesday also reported a quarterly increase of 43,000 pay TV subscribers, its first gain after 26 quarters of losing video customers. Roberts recently said the return to growth marks "the beginning of an exciting reversal of trends," attributing it to technological

"NBCUniversal had an outstanding year," said Roberts. "As we begin 2014, we remain excited about our businesses and intend to continue to prudently invest to enhance our strategic differentiation and to drive growth.”

Fourth-quarter revenue for NBCUniversal increased 7.5 percent to $6.5 billion as operating cash flow jumped 14.3 percent to $1.3 billion, reflecting improved performances in all segments.

For the full year 2013, NBCUniversal revenue declined 0.7 percent to $23.7 billion. Excluding $259 million of revenue generated by the Super Bowl and $1.2 billion from the London Summer Olympics in 2012, revenue increased 5.7 percent. Operating cash flow in 2013 rose 15.2 percent to $4.7 billion, or 18.7 percent when excluding the Olympics.

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For the fourth quarter, revenue in the film unit increased 4.9 percent to $1.4 billion, driven by higher home entertainment revenue thanks to Despicable Me 2, partially offset by a decrease in theatrical revenue. Key film releases in the fourth quarter included Lone Survivor and The Best Man Holiday. Operating cash flow more than doubled to $192 million thanks to the higher revenue and a decrease in the amortization of film costs.

For the full year, film revenue grew 5.7 percent to $5.5 billion, with the company highlighting "the strong performances of Despicable Me 2, Fast and Furious 6 and Les Miserables." Full-year operating cash flow increased $404 million to $483 million thanks to the strong film slate and lower advertising, marketing and promotion expenses.

The broadcast TV unit posted an 11.5 percent revenue gain to $2.2 billion in the fourth quarter driven by an 8.3 percent increase in advertising revenue, as well as higher retransmission consent fees and content licensing revenue. Operating cash flow increased 54.8 percent to $140 million as the revenue growth was partially offset by higher programming and production costs to boost the NBC primetime schedule.

For the full year, broadcast revenue decreased 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 "reflecting higher revenue and a modest decrease in programming and production costs."

For the fourth quarter, cable networks revenue increased 5.3 percent to $2.3 billion as ad and distribution revenue rose. Operating cash flow climbed 3.8 percent to $929 million as increased spending on original programming and sports programming, as well as higher advertising, marketing and promotion expenses eroded part of the revenue gain.

Full-year cable networks revenue rose 5.4 percent to $9.2 billion as operating cash flow increased 6.0 percent to $3.5 billion amid similar trends as in the latest quarter.

For all of Comcast, the latest earnings figure came in slightly below Wall Street expectations. The company reported fourth-quarter earnings of $1.9 billion, up from $1.5 billion in 2012, on revenue of $16.9 billion, up 6.2 percent. For the full year, earnings amounted to $6.8 billion, up from $6.2 billion in 2012, as revenue increased 3.3 percent to $64.7 billion.

Comcast ended the year with 21.69 million video customers, down 305,000 in 2012 after a 2011 decline of 336,000. It added broadband and telephony subscribers in 2013.

As of Dec. 31, video, broadband and telephony customers totaled 53.1 million, an increase of 1.8 million or 3.4 percent over the prior year.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai