NBCUniversal Posts Mixed Third-Quarter Financials

Steve Burke - PR Headshot - P - 2011

UPDATED: Parent company and cable giant Comcast recorded a 165,000 video subscriber decline for the period, which came in below the 275,000 drop in the year-ago period.

Cable giant Comcast on Wednesday reported lower video subscriber declines at its cable systems and mixed third-quarter results for NBCUniversal, in which it owns a 51 percent stake, as the entertainment company's revenue rose, but operating cash flow declined.

NBCUniversal, in its second full quarter under Comcast's control, posted quarterly operating cash flow of $951 million, down 9.3 percent from the year-ago period, or 1.4 percent when excluding certain items.

Revenue at the entertainment firm led by CEO Steve Burke, rose 4.6 percent to $5.2 billion as cable networks, theme parks and broadcast operations posted gains of 12 percent, 9.1 percent and 2.9 percent, respectively, but the film unit saw a 7.8 percent decline. The theme parks were the only unit that saw an operating cash flow improvement in the quarter.

"Overall, this quarter continued our momentum toward a successful integration," Comcast chairman and CEO Brian Roberts said about NBCUniversal, reiterating his team's focus on long-term value and on building successful brands."I feel we are making real progress on all fronts," he added on a conference call.

NBCUniversal has recently announced a slew of investments. For example, its Telemundo acquired soccer World Cup rights, which its rival Univision previously held. And the company's NBC TV stations earlier this week vowed to invest millions to increase their local news offerings.

On Wednesday's call, Roberts said that the Telemundo World Cup deal will be profitable for the company and allow it to cover and cross-promote the Cup across TV, online and wireless platforms.

Comcast's overall third-quarter financials improved, but it once again lost video subscribers, although fewer than in the same period a year earlier. The drop of 165,000 compared to 275,000 in the year-ago period and came in well below analyst expectations for losses of arond 200,000. The company, the largest U.S. cable operator, ended September with 22.36 million video subscribers.

Comcast's overall quarterly profit of $908 million was up 4.7 percent, but came in below Wall Street expectations. Revenue rose to $14.3 billion.

At NBCUniversal, broadcast revenue in the third quarter rose "reflecting higher content licensing revenue, partially offset by ratings pressure at the NBC broadcast network and lower political advertising at NBC owned local stations," the company said. An operating cash flow loss of $7 million compared to positive operating cash flow of $70 million in the third quarter of 2010, "reflecting increased investment in primetime, news programming and local stations, as well as acquisition-related accounting revisions totaling $24 million." Excluding accounting revisions, third quarter operating cash flow was $17 million.

Cable networks revenue in the third quarter benefited from a 9.5 percent advertising gain, among other things. Operating cash flow decreased 2 percent to $751 million compared amid increased investment in original programming and acquisition-related accounting revisions. Management on Wednesday's conference call lauded the continued success of USA and other cable channels.

NBCUniversal's film unit posted lower revenue due to lower theatrical results, partially offset by higher home entertainment revenue from Bridesmaids and the international release of Fast Five. Third-quarter film operating cash flow fell 16.9 percent to $54 million.

Asked about a recent announcement that NBCUniversal will spend on making its NBC TV stations more competitive, Burke said the investment is important, but not huge, amounting to $20 million-$30 million on an annualized basis.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai