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GE’s Immelt Downplays NBCU’s Ratings Problems

Oct 14, 2005  •  Post A Comment

The chairman of NBC Universal parent General Electric attempted Friday to contain the severity of the problems confronting the entertainment unit’s broadcast network, saying that ratings challenges confronting NBC are being more than offset by strong results in NBCU’s film and cable assets.

Speaking to investors during the company’s third-quarter earnings call Friday morning, GE Chairman Jeffrey Immelt acknowledged that NBC’s prime-time ratings declines have taken a toll on NBCU’s overall performance, and he warned that they would continue to do so through the first half of 2006.

However, Mr. Immelt and GE Chief Financial Officer Keith Sherin each sought to show that NBC’s woes would not have a profound impact on either NBCU’s overall results or those of GE.

“We are rebuilding our prime-time programming,” Mr. Immelt said. But “it will be a journey.”

In a bit of a shift from past earnings calls, GE executives provided a more detailed analysis of NBCU’s results, splitting the entertainment operation into two distinct categories. They pointed out that the problem areas-prime-time programming, television production and owned-and-operated television stations-account for just 32 percent of NBCU’s overall segment profit picture, while NBC News, NBCU’s cable networks, the film studio and theme parks account for 68 percent of NBCU’s segment profit.

Using that math, NBCU’s third-quarter segment profit was able to grow 13 percent to $603 million, largely on the strength of news, cable and the studio, which reported a 31 percent surge in segment profit to around $410 million. The problem areas collective reported an 11 percent decline in segment profit, resulting in a contribution of $193 million for the quarter.

Revenue for the entire NBCU operation fell 26 percent to just over $3 billion. The company said the decline was driven largely by the absence of $930 million in Olympics broadcast revenue. Excluding that figure, the company said, NBCU’s revenue would have been down 4 percent.

GE officials emphasized that NBCU accounts for just 10 percent of the conglomerate’s overall revenues.

Both Mr. Immelt and Mr. Sherin each acknowledged the challenges facing NBC’s prime-time schedule, but appeared to be bullish about the network’s long-term prospects.

Mr. Sherin said the company believes NBC is “making progress in the fall lineup” and added that NBC News continues to perform well. He said that “Today” widened its lead over “Good Morning America.” However, Nielsen Media figures show that for the of week Oct. 3, that gap had narrowed once again, this time to around 150,000-the narrowest since May.

Looking ahead, Mr. Immelt predicted NBCU’s segment profit for the full year would be around $3 billion, representing a 15 percent increase over 2004. Profit for the prime time, production and stations profit is estimated to be off by 25 percent, while profit for the rest of NBCU is estimated to be up 50 percent. In 2006, Mr. Immelt said NBCU would be “flatish” as the unit continues to deal with its prime-time challenges.

Overall, GE said its third-quarter profit rose 15 percent to $4.7 billion, while revenue rose 9 percent to $41.9 billion.