NBC On The Rebound, Says Parent GE

Citing momentum in prime time, top executives at parent General Electric labeled NBC's current status as "turnaround underway" on Friday. And they projected that a stronger performance at the network--headlined by "Sunday Night Football" and an "ER" renaissance--would spur an improvement.

Still, NBC's current scatter pricing is up only 4 percent over the upfront, according to GE CFO Keith Sherin. (If the slight increase continues, clients could be further emboldened to deemphasize the upfront.) And only one of NBC's new shows appears to be a hit; "ER" is prospering arguably because CBS ceded the time period; and football is often considered a loss leader due to hefty rights fees, and will be off the schedule come January.

But on a conference call to discuss third-quarter results, Sherin said: "We feel like we're making a lot of progress here--the team is doing a good job."

Speculation about the future of "the team" has accelerated recently with NBC's mixed results--and GE Chairman-CEO Jeff Immelt declined to comment Friday on any future executive changes. Jeff Zucker has long been viewed as the successor to Bob Wright as NBC Universal CEO--but Beth Comstock, who heads the company's digital operations, has reportedly come into the picture. And, the New York Post reported, so has former Viacom CEO Tom Freston.

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On Friday, NBCU posted its fourth straight quarter with declining profits, with a 10 percent drop versus a year ago to $542 million. "NBCU continued to be a negative as expected," said Sherin.

But GE projected 10 percent profit growth at NBCU in the fourth quarter on, up to a 5 percent revenue growth.

"NBC is rebounding and we think it is well-positioned in the fourth quarter of 2006 into 2007," said Immelt.

Both executives cited a promising start to the new season. Over the first three weeks, NBC is up 12 percent versus last year in the key 18-to-49 demo. "Sunday Night Football" has given the network a top-5 show, "Heroes" is the season's top-performing new scripted show, and "ER" has returned to leading the Thursday at 10 p.m. time period.

But NBC's other new shows have gotten off to a lackluster start. And "ER's" 18-to-49 ratings are essentially flat compared to last year at this time, and the drama has surely benefited from CBS's decision to move the time-period-winning "Without a Trace"--the only show to ever beat "ER"--to Sunday.

NBCU did have some bright spots in the third quarter, Sherin said--particularly a 17 percent revenue jump in its entertainment cable group, which includes USA and Bravo. And he cited the news unit's solid performance with the morning and nightly news programs.

Overall, NBCU posted a 20 percent revenue gain to $3.6 billion, but Sherin said that was largely due to increases in film and DVD revenues spurred by more releases at the Universal unit.

Immelt was noncommittal on whether GE would look to divest NBC with private equity investors' heightened interest in media properties. GE could be forced to buy Vivendi's 20 percent stake (GE owns the remaining 80) in NBCU next year.

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