NBC Cleans Up Its Earnings Act for Comcast
by Peter Kafka
Posted on October 16, 2009 at 4:27 AM PT
After a couple of miserable quarters, NBC Universal and Jeff Zucker finally have some good news to announce: Earnings actually increased in Q3, even though the entertainment conglomerate’s revenue kept dropping.
The numbers, via parent company GE’s (GE) release this morning: NBCU posted a $732 million operating profit, up 13 percent year over year, on revenue of $4 billion, which is down 20 percent. Important footnote: As GE explained during its earnings call, if you adjust NBCU’s performance for one-time gains, operating profit would actually be down nine percent.
Still, even that result is an improvement over previous quarters. So perhaps those numbers will cheer Comcast investors, who have been beating up the cable company ever since news of its talks to buy NBCU surfaced last month.
GE usually spends very little time discussing NBCU’s performance during its earnings calls, since investors are much more concerned with the rest of the company’s performance, and in particular, its troubled finance arm. But perhaps the pending Comcast (CMCSA) deal will change that this time around.
Some notes from the earnings call: GE CEO Jeff Immelt has joined the “recession is over” crowd, but only mentioned NBCU briefly during his opening statement. He says scatter pricing–ads that marketers buy during the TV season, as opposed to the spring “upfronts”–is “better.”
GE booked a $283 million one-time gain from the sale of some of its stake in the A&E cable channel. And it took charges on write-downs related to its stake in NDTV, its Indian TV investment, as well as the Weather Channel, which it bought alongside some private equity groups for $3.5 billion last year. But the company still ends up $89 million ahead in the one-time events column–the equivalent of a penny per share of earnings.
And as the company explains in the table below, if you take out the one-time gains, NBCU’s quarterly profit increase turns into a loss. This is a reverse of previous quarters, when the company told investors to ignore one-time losses that made horrible earnings look even worse.
More color on the scatter market: CFO Keith Sherin says Q4 pricing is up “double digits” for primetime TV spots, and more than 20 percent for cable TV.
Asked a vague question about the proposed NBCU deal, Immelt gave a vague answer, noting that while “NBCU is a great franchise that’s consistently delivered income growth and cash…we always evaluate our portfolio.” He then suggested that GE doesn’t need to sell NBCU, which is the right thing to say. “We just want to be ready for several scenarios….We don’t have a specific pronouncement, or a specific need for cash.”
Here’s GE’s broad-stroke description of NBCU’s quarter (click to enlarge):
