Local TV drags on NBCU


NBC Universal Q4 revenues were down 3% and profits 6% as General Electric reported a 44% drop in net earnings. GE CEO Jeff Immelt said strong cable earnings at NBCU were offset by declines at the local NBC O&O stations. The big drag, predictably, was the Capital Finance segment, where profits plunged 67% to just over $1 billion.

GE may have set the record for a financial press release headline – 46 words – as the company sought to highlight all of its major issues, not just the major numbers, but also stating that the company planned no change in its dividend and also plans to hold onto its AAA credit rating. The sub-head that followed was more like a paragraph, hitting all sorts of points that management wanted to relay to investors and Wall Street.

In the quarterly conference call, one analyst noted that it was probably the first time ever that GE had gotten more questions about its financial division that the industrial operations, but that certainly reflects the current national economic crisis. Company officials didn’t deny that there are challenges, but they insisted that the Capital Finance segment is still writing new business and earned $8.6 billion in profits for 2008, including $1 billion in Q4.

And while full year earnings for the entire company were down 19% to $18.1 billion, that was still, GE officials noted, the company’s third highest earnings ever.

“In a very tough environment, we delivered fourth quarter business results in line with expectations we provided in December. We grew Infrastructure and Media by 3% in the quarter and 10% for the year. Energy Infrastructure led the way in the quarter with 11% segment profit growth driven by continued global demand. Technology Infrastructure grew earnings by 1%, led by 21% growth in Aviation. NBC Universal segment profits declined 6% in fourth quarter as strong cable earnings were offset by declines in the local stations,” Immelt said.

For NBCU, Q4 revenues of $4.43 billion were down 3% and profits declined 6% to $865 million. Cable continued to post strong performance, with revenues up 11%. MSNBC was up 37%. USA Network, Bravo, CNBC and Sci Fi were all up double digits. The NBC Network and TV production businesses were credited with a strong quarter, but the local television business was soft. Revenues for the local stations were down 25% and operating profits 55%. Overall, profits for the television operation were down about 15%. Still-young Hulu was credited with good growth in the digital media segment. Films and theme parks were mixed.

RBR/TVBR observation: Has this Blue Chip been chipped? GE’s stock took a beating Friday as traders worried that Immelt won’t be able to maintain the company’s AAA credit rating and at the same time maintain the current dividend payout of $1.24 per year. The betting is that the dividend will be cut in order to protect the credit rating.