NEW YORK — NBC expects to increase operating profit 12% to 15% in 1997, to between $1.1 billion and $1.15 billion, largely driven by growth at the NBC network and CNBC cable network, the broadcaster told Wall Street analysts Thursday.
At an annual briefing for analysts covering NBC’s parent, General Electric Co., web execs predicted its owned-and-operated station group would report little growth this year, earning about $500 million before interest, taxes, depreciation and amortization (cash flow), but said the network cash flow will continue to grow at double-digit rates, also to about $500 million, according to several who attended at the meeting.
Because the network and the stations are coming off a presidential election year in which NBC also broadcast the Olympic Games, analysts said the expected result was “extremely good” and described the meeting as “upbeat.” The Olympics contributed $70 million to $80 million in ad revenues to the stations and $685 million in total to the network, making 1997 gains harder to come by.
NBC’s primetime ratings have slipped this season, falling 10% since September and narrowing the gap with its rivals. But West Coast prexy Don Ohlmeyer sought to downplay the decline as minor. He said the web still retains a comfortable lead in its 18-to-49 demographic target and has shown improvement in latenight, daytime and news. Ohlmeyer and other execs pointed out that NBC’s performance in the upfront ad market, with $2.1 billion, easily outpaced other webs.
Aside from Ohlmeyer, NBC president-CEO Bob Wright, CNBC prexy Bill Bolster, NBC Sports president Dick Ebersol and NBC News prexy Andy Lack presented overviews of their businesses at the meeting in the network’s Rockefeller Plaza headquarters.
Wall Streeters concerned about future growth in an era of network erosion were pointed to cable, where NBC said its main priority is turning a profit on MSNBC through improved ratings, now that it has cleared the key distribution hurdles.
Cable plugs in
CNBC this year is expected to earn cash flow of $120 million, up 33% from last year, on revenues of $225 million to $250 million, aided by substantial growth in subscriber fees from cable operators. CNBC ad revenues will total $140 million, up an estimated 30%, a figure likely to increase further if the network can become a bigger factor in primetime.
And MSNBC, while losing money and turning in ratings substantially below projections, isn’t diluting NBC earnings, an exec said, because of the way its partnership is structured with Microsoft Corp. and “how we get paid” by the software giant.
Overall, execs touted NBC’s cable portfolio as its “hidden” asset, estimating at a combined $4 billion the current market value of CNBC, a 50% stake in MSNBC, its 25% stake in Cablevision’s Rainbow Programming unit, and minority stakes in other webs like A&E and Court TV. But they indicated no plans to sell any of those interests.
In cable, NBC said the focus was on getting MSNBC into the black and taking CNBC to its full potential. Cable is expected to earn about $250 million this year, providing most of the broadcaster’s growth, and the bulk of that comes from CNBC.
The presentation also highlighted the strength of NBC’s O&O stations in New York and Los Angeles, where NBC claims 40% of the advertising revenue. WNBC in New York is the most profitable station in the country, execs said, with a profit margin of 66%.