NBC's Big Financial Day: But Ad Clouds Loom

NBC Universal now says its upfront advertising performance wasn't as bad as first reports indicated.

During its second-quarter earnings call to analysts on Friday, partner General Electric said the network took in $2 billion this past upfront sales period. That was down from $2.7 billion the year before. Media agency analysts had speculated that NBC sank to $1.9 billion this past upfront sales period--down from a $2.9 billion number the year before.

The company also said that media buyers theorized during the upfront just completed that the network held back upfront inventory in hopes of selling it in the scatter market at higher program pricing.

Overall profit at NBC Universal climbed 27% to $979 million in the second quarter. But that was inclusive of Universal Studios' deal, which wasn't a part of the company in the second quarter the year before. Without Universal, NBC's profits would have only been up 4%.

NBC Universal revenue jumped 35% year-over-year to $3.9 billion in the latest quarter, bringing the unit's total gains for the first half of this year to 68%. Much of NBC's strong revenues in the second quarter 2005 came from last year's 2004 strong upfront market.

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Bad times will come before more good times at NBC. Talking to security analysts on Friday, GE Chairman and CEO Jeff Immelt said: "We are going to phase into some entertainment issues at NBC Universal, but we do that with massive strength across the totality of the company. We have got to do a better job on the (NBC) programming front. That's what we're all working on."

Although the network witnessed a 17% prime-time ratings decline in the past season, GE sees some problems in the upcoming 2005 earning periods for the network. But Immelt sees gains--double-digit financial gains for NBC Universal in 2006.

Operating profits at NBC Universal are expected to be up 15 percent to 20 percent on the strength of NBC News and the cable networks, film business, and theme parks. The broadcast network will continue to face challenges. But Immelt said the overall NBC Universal business model will help smooth volatility at the broadcast network.

GE said ratings for its cable networks USA Network and Sci Fi Channel rose 7% and 11%, respectively, in the second quarter for adult viewers ages 25-54.

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