Winter Olympics, Prime-Time Lineup Drag Down Q1 Profit for NBCU

Apr 13, 2006  •  Post A Comment

NBC Universal saw its segment profit fall 8 percent in the first quarter as persistent ratings weakness in NBC’s prime-time lineup, along with red ink generated by the network’s airing of the Winter Olympics in February, weighed heavily on the media giant.

NBCU, which is a unit of conglomerate General Electric, produced a first-quarter profit of $654 million, down from $709 million a year ago. Revenue surged 24 percent to $4.5 billion, fueled in large part by robust Olympics advertising sales and strength at NBCU’s cable and film businesses. The results were released Thursday as part of GE’s overall financial results for the quarter, in which GE posted a 9 percent gain in profit of $4.3 billion on a 10 percent jump in revenue to $37.8 billion.

GE officials maintained the results met their guidance for the first quarter, with the profit decline coming in weaker than initial estimates of a 10 percent drop.

However, the results continued to illustrate that woes at NBC remain a drag on NBCU’s overall performance. Though prime time, television stations and television production account for 25 percent of NBCU’s overall segment profit, its combined profit sank 25 percent in the quarter.

That compared with the rest of the NBCU’s businesses, which posted a 22 percent increase in profit, thanks to increases in subscriber fees at its cable networks, improved prime-time ratings at news channels CNBC and MSNBC and robust DVD sales of the film “King Kong.”

NBCU’s airing of the Winter Olympics proved to be a money loser for the media giant, generating red ink of around $70 million in the first quarter even as $684 million in revenue was booked from the Games. However, CE officials said they expected the broadcast of the Olympics to be profitable by the end of the year, once NBC collects nonrefundable contributions from NBC affiliates.

GE Chairman and CEO Jeff Immelt said during the company’s first-quarter earnings conference call that NBCU’s Olympics results were in line with expectations and were due in part to Torino being what he described as “a tough venue” that offered few opportunities for other GE businesses to participate.

That won’t be the case with the Summer Olympics in Beijing, which Mr. Immelt described as the “Big Magilla,” that could generate up to $1 billion in revenue for the entire company.