• by Paul Gough , October 11, 2003

Demand for NBC's high-priced ad inventory has slowed down during the fourth quarter of 2003, parent General Electric confirmed Friday in a quarterly earnings briefing with Wall Street analysts.

The admission confirms recent speculation that NBC was having a difficult time moving its fourth quarter scatter inventory (MediaDailyNews Oct. 1). In the briefing, GE acknowledged that NBC's scatter market was slow and that the peacock network's prices were flat with upfront rates for the fourth quarter, a troubling sign for the network and for upfront advertisers who paid high double-digit price increases to buy NBC's fourth quarter inventory last spring.

While the overall fourth quarter scatter market has slowed down considerably from other recent scatter quarters, the pricing plateau appears to be unique to NBC. Executives from ABC, CBS and Fox have said they are fetching at least single digit price increases over their upfront rates.

NBC Revenues, Net Income

           Q3 Revenues Growth   Projected Q4 Growth 
Revenue         $1,517   +11%                +5-10% 
Net Income        $431
+31%               +10-15% 

Source: General Electric third quarter earnings briefing.

A slowdown in the network scatter marketplace would be a concern for all the networks, as well as for advertisers and agencies that depend on the upfront as a price hedge against strong scatter market conditions. Weak scatter markets usually presage a weak upfront the following year.

While NBC's current position has weakened, the GE unit - which includes the flagship NBC broadcast network, as well as cable networks MSNBC, CNBC and Bravo - did post strong results for the third quarter, with revenues climbing to $1.51 billion, an increase of 11% over the third quarter of 2002.

And given the network's strong results during the upfront marketplace, GE said it still projected relatively strong overall gains for the fourth quarter, with revenue expected to grow between 5% and 10%.

But the GE subsidiary is poised to grow even further sometime in the second quarter of 2004, when the expected merger of NBC and Universal will bring three more cable networks (Trio, Sci Fi and USA), a movie studio and a television production company into the fold.

While GE executives didn't spend a lot of time discussing the proposed merger between NBC and Universal - that was the topic of a separate conference call with analysts Wednesday - Chairman/CEO Jeff Immelt said that the combined company would give NBC new areas of growth and strengthen its cable services.

"Strategically, it definitely strengthens NBC," Immelt said.

Immelt said he was pleased by NBC's performance, which he singled out as one of two areas of GE's varied units that was strong. NBC exceeded expectations for the third quarter with a strong performance in the summer than continued into the first week of the new television season, Immelt said.