NBCU posted a 3% year-over-year gain in operating profit and revenue in the first quarter, but the rosy numbers came against the gloomy backdrop of parent GE’s results.
GE reported its worst quarter in years, sending the stock market into a tailspin. Earnings of $4.3 billion fell short of estimates — a rarity for the button-down conglom — and stunned Wall Street just one month after chief exec Jeffrey Immelt had issued an upbeat forecast.
GE, of which NBCU comprises only 10% in terms of revenues, saw its stock plummet 13% to $32.05, the biggest single-day dip in more than 20 years. The Dow Jones, of which GE is a component, fell 2% amid worries that the company’s state symbolized the worsening U.S. economy.
NBCU was one of just two of GE’s six units (along with infrastructure) to report gains in the quarter, and its 3% upswing in operating profit to $714 million also fell a bit short of projections and repped a slowdown from 5% growth in the previous quarter. The entertainment division’s results were driven primarily by cable, homevid and the NBC network.
In a memo to staffers, NBCU topper Jeff Zucker noted the bleak economic climate, but emphasized the pluses. Parks and resorts, he said, doubled its operating profit. Hulu, a video streaming site in which NBCU and News Corp. are major stakeholders, launched in the quarter and Zucker said its ad inventory had sold out.
Among cable nets, USA finished No. 1 in every category for the seventh consecutive quarter, Zucker said, while Bravo and Oxygen had their best first quarters ever in terms of ratings and financial results.
CNBC and MSNBC had their highest-rated quarters in more than six years, Zucker said. And NBC’s “Knight Rider” had the best TV movie ratings for the net of any movie since 2005.
After bullet-pointing more than a dozen bright spots, Zucker’s memo went on to address broad changes in the overall media-entertainment sphere.
“I think one reason for our continuing success is that we are ahead of the competition in not just knowing what has to change but actually making the change,” he told the troops.
Zucker cited the shift in upfront strategy and a scaled-down April 2 presentation that was earlier and more intimate than in previous years, theoretically improving the Peacock’s chances of selling ad buyers on its “52-week season” concept.
“Even as we change the way we do business, it has become clear that the American economy is suffering,” Zucker added. “Like most businesses, we are seeing the effect. This means we are going to have to be smarter and more vigilant about staying ahead of the economic downturn.”