• by David Goetzl  @dgoetzl, December 12, 2007

While some media companies have denied the "Hollywood" writers' strike will hurt profits short-term, General Electric CEO Jeff Immelt said Tuesday that it's already having an impact at NBC Universal--and GE cut profit projections for the fourth quarter there. Separately, Immelt said GE will look to cut costs at NBCU that will lower investment in prime-time programming at the flagship network.

GE had projected a 10% to 15% growth in segment profit at its NBCU unit in the fourth quarter, but Tuesday Immelt said it will come in at the 10% low end, citing the "impact of the strike."

Due to the strike, the NBC network has had to run repeats of prime-time hit "The Office" as well as late-night programs from "The Tonight Show" to "Saturday Night Live." Still, GE's downgrade was striking, since NBCU competitors have denied the strike would have a negative impact for some time. News Corp. COO Peter Chernin even said: "My guess is that during fiscal '08, a strike is probably a positive for the company."

Immelt made his comments in a presentation to investors, where he later said NBCU could be hurt further going into 2008 "with the headwind of the writers' strike." Ratings hurdles at the NBC network also continue to have an impact, he said.

Still, with a strong performance at the cable fleet from USA to MSNBC--which Immelt referred to as the "heart" of NBCU--he said: "The vast majority of NBC Universal is doing well." Solid growth is also expected overseas, he said. Overall, he referred to growth opportunities in cable and globally as "tremendous."

NBCU CEO Jeff Zucker recently said NBC prime-time accounts for only 10% of overall NBCU profits. The network, which had a long run as the leader in prime time, has been in fourth place.

Nonetheless, even while acknowledging the importance of top-notch content, Immelt said GE will be aggressive in cutting expenses at NBC--and in the process look to establish a new business model there.

"We've got to continue to look for ways to take costs out of the system," he said.

He mentioned further consolidation between NBC and TV production arm Universal Media Studios as one possibility ---and his presentation included a slide citing goals to "further reduce prime costs ... focus on 'key hours'" and "selectively utilize low-cost content in prime."

He suggested "working on prime costs by making it a little bit more like the movie business in terms of having some tentpole shows and some shows that are lower-cost that are built for different parts of the schedule--and this is just going to be one we've got to continue to work on the business model, where cost is going to be an important part of it."

NBC has floated the idea of cutting costs in programming at NBC by focusing on cheaper reality series--particularly in the 8 p.m. hour--before. But it recoiled when affiliates and others criticized the move.

For 2007, GE forecasts that NBC (the network and stations) will bring in some $700 million in earnings. The cable unit will generate some $1.7 billion, followed by the Universal film and parks group at $900 million.

Immelt said the Olympics and election should help NBC next year, where GE forecasts 10% earnings growth. Some 15% growth is projected for the cable group and 5% at the film/parks unit. (NBC did lose $70 million on the 2006 Torino games).