NEW YORK – NBC and Westinghouse tried to wow Wall Street in their first-ever pitches at the annual PaineWebber media conference Wednesday.
NBC, capping perhaps its strongest year yet, reviewed highlights of its primetime strength and cable expansion, while Westinghouse detailed its strategy for melding with and improving CBS and Infinity Broadcasting.
Despite ratings declines that have plagued NBC and other broadcast networks this season, “we’re in the best relative position we’ve enjoyed or any network has enjoyed in 10 years,” said Robert Wright, the Peacock web’s president and CEO.
Despite NBC’s strength, Wright said he doubted parent General Electric Co. would consider a spinoff of the network. And though NBC owns or produces 77% of its programming, largely on the news and cable front, he acknowledged “our weak spot is not having a clear pipeline or a clear advantage on the entertainment side” to match its distribution.
“Maybe nobody does,” he continued, alluding to rival Walt Disney Co.’s programming muscle with ABC. “With so many programs being produced, you can’t monopolize talent. This isn’t the 1940s era of the studio system. We compete very aggressively and economically, and we do lose people from time to time who want packages with theatricals. But if I were concerned about that, I would’ve formed a partnership with a theatrical producer.”
He also downplayed rumors that NBC could snare cabler USA Network from feuding co-owners Viacom and Seagram, which another senior NBC exec called “extremely unlikely.” But Wright acknowledged he’d be interested in a broad-based cable network if it were available and had a “reasonable chance to be successful.”
He also said acquiring another TV station or two in the top 30 markets was “a goal, but not an obsessive one.”
But NBC seems to be doing well enough on its own. Buoyed by an advertising windfall from the summer Olympics, the net expects to report cash flow of $1 billion this year, on revenue of more than $5 billion, and while next year’s total will likely be lower, the web projects at least a 10% profit growth after excluding the Olympics’ impact.
Among other financial highlights, the network’s news division has expanded profits to $150 million this year, more than doubling since 1994, while CNBC is “pushing” $100 million in revenue, up from $16 million in 1993, its first year.
Over at Westinghouse, chairman Michael Jordan gave Infinity CEO Mel Karmazin center stage to outline the strength of the 79-station radio group he will lead, which earned revenue of $1 billion this year, more than the next three competitors combined.
“We could not come up with a scenario where anyone can replicate the position we’re in in major markets,” Karmazin boasted, adding that combined revenues in New York City alone – totaling $185 million, or 36% of the radio market – are equal to those of WCBS-TV.
The combined clout gives the company “a chance of significantly increasing” 7% projected industrywide growth rates, largely at the expense of newspapers, but that won’t come simply from discounting ad time on joint sales.
Westinghouse chief financial officer Fredric Reynolds outlined plans to boost profitability on the TV station side and echoed Wright’s enthusiasm for program ownership, noting that syndication sales by the company’s Eyemark unit of CBS-owned “Walker, Texas Ranger” almost tripled the value CBS would have realized had it simply licensed the series. Development deals with Sony and Steven Bochco that give the company stakes in shows will add to the revenue pipeline, but Jordan wouldn’t comment on broader acquisition targets, including Gaylord Entertainment, for which it manages two country music cable networks.
“We are a relatively financially sophisticated company, so we’re not going to do anything stupid here,” he said.
The Eye on People cable channel “needs” contracts for carriage in systems reaching just 3 million households for its April 1 launch, while “success would be north of 9 or 10 million at the end of the first year, and we feel pretty comfortable about getting there,” Jordan said. He also promised management changes to bridge the gap between CBS and Group W Satellite Communications, which now report to Jordan separately.
In a declining market Wednesday, Westinghouse shares closed at $18, down 50¢, while GE fell $1, to $97.