NBCU profits down as parent GE beats expectations


Q4 net earnings of just over $3 billion were better than Wall Street had expected for General Electric. The worst performer, by far, was GE Capital Finance, but NBC Universal was weak and claimed second place from the bottom.

NBCU’s revenues actually held up fairly well, down only 4% for the quarter to $4.27 billion. But profits fell 30% to $602 million. For all of 2009, NBCU revenues fell 9% to $15.44 billion and profits were down 28% to $2.26 billion.

GE CEO Jeff Immelt praised the Capital Finance unit for holding up well in a difficult environment. He said every segment of the finance business was profitable, except for real estate lending. GE Capital Finance saw revenues drop 15% for the quarter and 24% for the year, with profits down 76% for the quarter to $336 million – a little better than half of the profits at NBCU – and down 73% for the year to $2.34 billion – pretty similar to NBCU.

Of course, assuming regulatory approval for the sale of a majority stake in NBCU to Comcast, GE will look very different a year from now. GE Capital Finance will still be there, and Immelt hopes, much more profitable, while only a minority stake in NBCU will remain.

What gave GE’s stock price a boost on Friday was neither the finance division or NBCU, but its traditional manufacturing businesses. They reported a bigger than expected backlog of orders, which bodes well for business in 2010.

As for the current report on business at NBCU, GE CFO Keith Sherin told analysts that scatter pricing for the NBC Network was up in the low double digits in Q4 and that has grown to more than 20% in Q1. Scatter pricing for the cable networks was even better, up over 30% in Q4 and tracking up just as much in Q1.

“We’re seeing benefits on the network, cable and the local stations,” Sherin said. “The ad market’s definitely getting better.”

In fact, the biggest drain on NBCU in Q4 and for all of 2009 was not ad sales, but weakness in the Universal Studios movie business.

Of course, there was a brief reference to the Leno-O’Brien shakeup, but Sherin said that with all of the news reports about the events, he really didn’t have anything new to add.

RBR-TVBR observation: The advertising business is coming back. Even GE, which is cutting its exposure to the ad market, reports that the recovery is underway.