NBCU Profits Jump 38% in 4th Quarter

Earnings improve as Comcast acquisition nears

By Jon Lafayette -- Broadcasting & Cable, 1/21/2011 8:30:00 AM

NBC Universal's profit jumped 38% in the fourth quarter, the last quarter the media conglomerate will be part of General Electric.

The acquisition of a majority stake in NBCU by cable giant Comcast was approved earlier this week by the Federal Communications Commission, which imposed conditions on the deal. The deal is expected to close by Jan. 28.

Driven by its cable networks, NBCU's profit was $830 million, up from $602 million as revenues rose 12% to $4.8 billion in the quarter.

In a note to staffers, NBCU CEO Jeff Zucker noted that the company was in "extremely good shape" as it approaches the end of a lengthy transition period.

Zucker said "our cable networks continued to hit it out of the park," with double-digit growth in operating profit. Among other highlights, CNBC had a record financial performance.

"Jeff Zucker and the team had a great fourth quarter," said GE CFO Keith Sherins during the company's earnings call with analysts. "The results were broad based. Cable continues to deliver terrific performance." He said cable revenues were $1.5 billion, up 15%, and profits were up 16% to $740 million fueled by "great strength in the entertainment properties."

Broadcast revenue was up 11% to $1.8 billion. "Profit was also positive driven by a strong performance in local media, great performance in the NFL and news, partially offset by continued investments the team's making in primetime programming," Sherin said.

In its earnings materials, GE noted that Bravo and Oxygen had their best years ever in both ratings and profits. At the NBC broadcast network, GE noted that ratings were bolstered by football, but there were "no break-out shows from fall schedule." Local ads were up double digits on strong political spending, the company said.

"In short, a great job by all, and I want to thank each one of you for your part in making sure we kept our focus, discipline, and creativity under circumstances that have had their share of distractions," said Zucker in his memo, who will leave the company when the Comcast deal is completed. "You helped me achieve my most important goal, which was to make sure we handed off this company in excellent shape. I don't think we could have done more."

For all of 2010, NBCU's profits were flat at $2.3 billion. Revenues were up 9% to $16.9 billion.

The full text of Zucker's memo can be found below:

GE reported its fourth quarter earnings today, and as I always do, I wanted to take the opportunity to share with you our results. As we approach the end of a lengthy transition period and the start of a new NBC Universal under new leadership, I am very pleased to say that the company is in extremely good shape.

For the fourth quarter of 2010, nearly every part of the company delivered very strong results. Revenue was up 12% to $4.8 billion, with operating profit up 38% from last year, to $830 million.  Up thirty-eight percent, purely from performance. No one-time gains, no sales of assets.

Our operating profit performance equaled the best quarterly performance since the merger of NBC and Universal in 2004.

In short, a great job by all, and I want to thank each one of you for your part in making sure we kept our focus, discipline, and creativity under circumstances that have had their share of distractions. You helped me achieve my most important goal, which was to make sure we handed off this company in excellent shape. I don't think we could have done more.

Let me just mention a few highlights from our divisions in the fourth quarter:

As has been the case consistently for quarter after quarter, our cable networks continued to hit it out of the park. As a group, cable operating profit posted double-digit growth. USA was No. 1 among cable entertainment networks for the fifth consecutive year, Bravo posted its fifth straight year of record ratings, and Oxygen had its best year ever. MSNBC beat CNN in adults 25-54 total day ratings for the first time ever, and CNBC turned in a record financial performance, with an exceptional digital performance helping us get there.

At NBC, Sunday Night Football was the No. 1 show in primetime by far. NBC News continued its long run of top-rated programs, with Today hitting 15 years in a row without ever losing a week, and Local Media finished a great comeback year with a superb quarter, with ratings strength at almost every one of our stations.

Universal Pictures ended the year very strong, as well, driven by outstanding DVD sales of Despicable Me. And our Parks & Resorts team turned in its best quarter and best year ever, with record attendance on both coasts, behind two new attractions: The Wizarding World of Harry Potter and King Kong 360 3D.

These are just a few highlights, among many. Again, every area of the company has much to be proud of.

Before I close, I want to say a word of thanks and congratulations to all the members of our corporate staff functions who have been instrumental in preparing us for the transition to a new owner. So many employees from Finance, Legal, Human Resources, Communications, Sourcing, Real Estate, Business Development and more have worked long and hard for many months and, as a result, we are well prepared to hit the ground running after the close of the deal, both operationally and functionally. Special thanks to our Chief Financial Officer, Lynn Calpeter, who has held the finances of the company together through all of this work, and to our General Counsel, Rick Cotton, who has been tireless in his efforts, never more so than in the last few weeks as he has shuttled nonstop between New York and Washington to get this deal approved. And thanks, as well, to the hundreds of people who were called into service during the transition.

As you know, the deal will formally close next Friday.That means this will be my last business update and indeed my last official word to each of you as CEO.Over the last few months, I made an effort to gather with every group of employees across the company. Hopefully, I've had a chance to meet and thank you personally for all you have done for this company. If I didn't get to you, please accept my thanks now.  I have been asked many times what I will miss the most about NBC Universal. That's easy. The wonderful people of this company. So many colleagues ... so many friends. I will miss you all.It has been a fantastic run of almost 25 years. For me, that chapter's ending, but for all of you it's an exciting new beginning. With Comcast, I leave you in good hands and have no doubt that you will continue to do great things. I look forward to following your progress.

With warm regards,
Jeff