NBCUniversal Posts Higher Quarterly, Full-Year Profits

NBCUniversal CEO Steve Burke

The film unit has its most profitable year ever as corporate parent Comcast reports financials that fall below Wall Street expectations and boosts its dividend and stock buyback plans.

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, posted higher quarterly operating cash flow, the profitability metric it uses, than in the year-ago period. Operating cash flow of $1.43 billion compared with $1.34 billion in the year-ago period, up 6.6 percent. The full-year figure of $5.59 billion compared with $4.73 billion in 2013, up 18.1 percent.

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As management had predicted, film-unit operating cash flow set a company record in 2014. In 2013, it had hit $438 million, which was a company record at the time.

Comcast said it added 6,000 pay TV subscribers in the fourth quarter to end 2014 with a total of 22.383 million video customers. In the year-ago period, it had grown pay TV subscribers for the first time in 26 quarters, adding 46,000.

Comcast's fourth-quarter earnings of $1.93 billion rose 0.6 percent from the year-ago period. That amounted to 77 cents per share on an adjusted basis, which came in just shy of Wall Street expectations. Comcast said its revenue rose 4.8 percent to $17.73 billion in the fourth quarter.

The cable giant, which is still waiting for regulatory word on its planned acquisition of Time Warner Cable, on Tuesday also increased its dividend by 11.1 percent to $1 per share on an annualized basis, or 25 cents per share quarterly.

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Comcast also increased its stock buyback program authorization to $10 billion. "At this time, Comcast plans to repurchase $4.25 billion during 2015, subject to market conditions," the company said. "Additional stock repurchases will be determined after the closing of the Time Warner Cable merger and the subsequent divestiture transactions."

Comcast chairman and CEO Brian Roberts said: "2014 was a great year financially, operationally, and strategically for Comcast NBCUniversal. We continued to execute incredibly well as we accelerated our innovation, launched new products and brought amazing films, shows and theme park attractions to consumers." He highlighted that Comcast's video subscriber trends were "the best in seven years."

Added Roberts: "NBCUniversal also had a standout performance in 2014, with 18 percent growth in operating cash flow, driven by a successful Sochi Olympics, continued momentum at NBC broadcast, the successful opening of The Wizarding World of Harry Potter-Diagon Alley in Orlando, and strong box-office performance from Universal Pictures."

The chairman briefly mentioned one of the big topics surrounding Comcast right now: the regulatory review of the TW Cable deal. "We enter 2015 with great momentum and significant opportunities ahead, and we look forward to receiving regulatory approval for the Time Warner Cable merger," Roberts said.

Comcast cited $99 million in quarterly and $237 million in full-year 2014 costs from the Time Warner Cable and related transactions in its earnings report.

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At NBCUniversal, fourth-quarter revenue increased 2.3 percent to $6.6 billion, driven by growth in theme parks and broadcast TV offset by lower filmed entertainment revenue amid a year-over-year decline in home entertainment, as the year-ago period benefited from strong contributions from Despicable Me 2. Operating cash flow increased driven by the stronger results at theme parks and broadcast TV, partially offset by lower film results and lower cable networks figures, driven by a 5.6 percent decline in advertising revenue along with a slight increase in operating costs.

For 2014, NBCUniversal revenue increased 7.5 percent to $25.4 billion, or 2.9 percent when excluding the Sochi Olympics. Operating cash flow increased 15.3 percent when excluding Sochi, "reflecting solid results at each business segment," the company said.

For the full year, film unit revenue fell 8.2 percent to $5 billion, "reflecting lower theatrical and home entertainment revenue, primarily due to the strong performances of Despicable Me 2 and Fast and Furious 6 in 2013. Operating cash flow rose to a company record $711 million "as lower revenues were more than offset by a decrease in the amortization of film costs and reduced advertising, marketing and promotion expense due to a reduced film slate," the company said.

Full-year 2014 broadcast revenue increased 20 percent to $8.5 billion due to higher advertising and retransmission consent fees as operating cash flow more than doubled to $734 million amid the higher revenue and an only "modest" increase in operating costs and expenses, the company said.

Full-year cable networks unit revenue rose 3.9 percent to $9.6 billion amid higher distribution revenue, partially offset by a 3.5 percent decrease in advertising revenue. Operating cash flow increased 2.5 percent to $3.6 billion thanks to the higher revenue and flat operating costs, "even as we continue to invest in programming," the company said. 

Email: Georg.Szalai@THR.com
Twitter: @georgszalai