30% drop in profits at NBC U contributes to decline
A steep 30% drop in profits at NBC Universal during the last three months of 2009 contributed to a 19% decline in overall earnings for General Electric during the fourth quarter.Rising costs of television sports rights like NFL games and Olympics, and falling DVD sales were given much of the blame for the poor performance at NBCU. While NBC said it was seeing good demand for the Olympics with the ad market picking up, it will still lose about $250 million to air the 2010 Winter Olympics in Vancouver next month. And without a major title like “Mamma Mia,” Universal moved 12 million DVDs during the quarter compared with 33 million in 2008. Profits for NBCU declined to $602 million from $865 million a year ago, while revenue fell nearly 4% to $4.3 billion. Its cable division is still improving with revenue up 8% to $1.3 billion and profits rising another 8%. USA, Syfy, Bravo and Oxygen were up nearly 20% in profits, the company said. Struggling NBC contributed to a 2% decline in revenue from the company’s broadcast arm, generating $1.6 billion. And Universal Pictures took in $200 million less in profit during the quarter over last year with pics like “It’s Complicated” and “Couples Retreat” unspooling during the period, while overall sales at the studio fell more than $400 million to $1.2 billion. There are signs the advertising market is making a comeback: Ad prices at NBC are 20% higher than commercials sold in May, before the start of the TV season in September. Cable ad prices are 30%. Overall, GE reported better-than-expected earnings of $3 billion during the period, compared to $3.7 billion a year ago. It generated $41 billion in revenue, a decline of 10%, and said it is seeing positive signs for the rest of the year, namely because of an uptick in orders for equipment. As orders pick up, “We’re positioned for growth in 2011 and beyond,” said GE chief Jeffrey Immelt during a conference call. One area it doesn’t expect that to happen is at NBCU, which GE is looking to sell to Comcast for $30 billion, as it reshapes its overall business to be a more streamlined industrial company, making jet engines and wind turbines. Immelt said the deal may be completed within a year, given that the company must now get the approval from regulators. For the year, GE reported a 14% decline in revenue of $157 billion and profits of $11 billion, a steep 38% drop.