NBCU revenues down; options discussed


General Electric CEO Jeff Immelt isn’t tipping his hand yet on what will happen to NBC Universal, saying GE is considering various scenarios. Meanwhile, NBCU revenues fell 20% to $.079 billion in Q3, while profits rose 13% to $732 million, mainly due to the sale of its A&E stake.

In the company’s quarterly conference call with analysts, CFO Keith Sherin gave some details. Cable networks revenues were up 8% to $1.2 billion, with profits up 11% to $552 million. “USA led the way as the number one cable channel for the 13th consecutive quarter,” he noted.

For the broadcast segment, revenues of $1.4 billion were flat, excluding the effect of the Olympics the previous year, with profits up 4% excluding the Olympics.

“Four weeks in, ‘The Jay Leno Show’ is exceeding our ratings estimates, as are Conan and Fallon, so we’re happy with the 10 o’clock and the late night performance,” Sherin said.

Fourth quarter scatter is up double digits for broadcast primetime, the CFO said, and up over 20% for cable.

Not mentioned in the conference call, but appearing on the accompanying slide show was this hopeful tidbit for broadcast station owners: “Local markets showing signs of improvement.”

Amid all the speculation about a deal with Comcast for NBCU, Immelt spoke a little – but very little – about the status of GE’s ownership. Of course, he did not actually mention Comcast or any other potential buyer or business partner.

Immelt noted that GE has a lot of cash, so it doesn’t have to do a transaction. “NBCU is a great franchise which has consistently delivered income growth and cash, pre-recession. Also, it’s been a solid performer. We’ve always evaluated our portfolio and I think in the context of what I’ve talked about, you expect this to be a re-set world and it’s a good time to be talking about the portfolio. I really do mean that,” Immelt explained.

“In the case of NBCU, Vivendi has been a great partner. They’ve got a window every year to really review their options for NBCU. We just want to be ready for several scenarios. One might be an IPO, or another strategic partnership, like the one we’ve had, actually, with Vivendi. So, I don’t have a specific pronouncement or specific need for cash. Look, in many ways we plan to operate NBCU over the long term, or partner if that accelerates the growth of the franchise. So, I wouldn’t look at this as that much more than what we’ve done in the past…” Immelt said, before turning to other parts of the conglomerate.

Vivendi’s board met last Wednesday, but there was no word from Paris whether any decision had been made about the disposition of its 20% stake in NBCU. The annual window in which Vivendi can order GE to either buy its stake or sell it in an IPO runs from November 15th through December 10th. 

Keeping the rumor mill buzzing, News Corporation CEO Rupert Murdoch said at his company’s annual shareholders meeting that he would look at an opportunities regarding NBCU, but noted that there are currently no negotiations taking place.

Liberty Media Chairman John Malone told a Bloomberg reporter that he’d be interested in buying NBCU – if he could pay “seven times cash flow.” He also said there are no negotiations taking place. There has been speculation that Malone would be a candidate to buy a minority stake in NBCU should it become available.

RBR-TVBR observation: OK, so Rupert said he’s interested. We think he’s just having some fun. To get an acquisition of NBCU past the FCC ownership limits and the DOJ antitrust watch dogs, News Corp. would have to divest far more than it would be able to keep. That sort of deal makes no sense.

To be sure, Murdoch would love to acquire some of the cable nets if they were separated, but that’s the part Comcast is most keen on acquiring, so there’s not much opportunity there.

As for John Malone, he’s always looking for an opportunity. Maybe Liberty could buy the Vivendi stake or part of GE’s minority stake after Comcast becomes the majority owner. Why not? But we doubt that he’ll get it for 7X CF.

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