Lindsey Jacobellis of the U.S. gets air but no medal in the women's… (Wally Skalij / Los Angeles…)
NBC Universal is relieved that its winter financial wipeout is finally over.
Parent company General Electric Co. on Friday released its first-quarter results, which included, as expected, substantial losses generated by NBC's coverage of the 2010 Winter Olympics in Vancouver, Canada.
Although GE posted a 32% drop in earnings, the company nonetheless beat analysts' expectations.
GE Chairman Jeffrey Immelt said there were signs the economy was improving, along with the industrial giant's profit margins -- except for a couple of problem divisions.
"NBC, because of the Olympics, was a drag on margins overall," Immelt said.
NBC Universal's operating profit of $199 million was down 49% compared with the first quarter of 2009. Revenue of $4.32 billion for the quarter was up 23% compared with the year-earlier period, but it was about flat when ad sales for the Olympics were excluded from the results.
GE executives warned investors several months ago that NBC would lose as much as $250 million on its coverage of the Vancouver Olympic Games -- but it did not turn out as bad as first feared. NBC ended up losing $223 million on the Olympics, GE said, thanks to better-than-anticipated advertising.
"In the end, the sales were better," GE Chief Financial Officer Keith Sherin said.
Ratings were 14% higher than for the 2006 Winter Olympics in Turin, Italy. The television network took in about $800 million in revenue related to the Olympics in February, Sherin said.
But that wasn't enough to offset the $820 million that NBC paid the International Olympics Committee for the TV rights, let alone the enormous costs of production to broadcast the 17 days of events.
And then there was the Conan O'Brien effect.
Sherin, donning his own comic hat, told Wall Street analysts: "You might have missed this, but we did a lot of shuffling of the lineup in the first quarter. You may not realize it, but we are reprogramming at 10 p.m."
NBC's late-night squeeze play -- canceling Jay Leno's failed prime-time show, moving him back to 11:35 p.m. and bumping O'Brien out of his coveted "Tonight Show" time slot -- was costly. GE did not break out the amount shelled out to get rid of O'Brien (although sources have said NBC paid $32 million to O'Brien and an additional $15 million in severance for show executives and crew members).
Since NBC canceled Leno's prime-time show in February, ratings at 10 p.m. have been up 45%. And, Sherin said, "Jay Leno is back in late night and he regained his No. 1 position."
NBC's Los Angeles-based movie studio, Universal Pictures, continued to deal with duds.
"Box-office results for movies did fall short of our expectations," Sherin said, but he noted that was partly offset by scaled-back spending on movie marketing. DVD sales were encouraging, with Universal selling 5 million units, led by the comedy "Couples Retreat."
On the upside, the television advertising market shows signs of recovery. Local television ad sales were up 15% in the first quarter, Sherin said, and some NBC network and cable channel ad sales were up as much as 20% over ad rates that were established last summer. That's a hopeful sign as NBC Universal heads into the all-important advertising sales season next month.
Cable television once again was NBC Universal's top performer. USA, Bravo and Syfy had strong results, and Oxygen turned in its best ratings ever. Profit at financial news network CNBC was up 7%, and MSNBC "had a few milestones," Sherin said, noting that it beat CNN in prime time for the quarter.
Overall, General Electric generated first-quarter net income of $1.87 billion, or 17 cents a share, compared with $2.75 billion, or 26 cents, for the year-earlier period. Revenue was down 5% to $36.6 billion.
"In media we have a negative, but we think our worst quarter is behind us," Immelt said. "We should see growth at NBC U for the remainder of the year."
GE shares fell 53 cents, or 2.7%, to $18.97 on Friday.