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NBCU Gains Modestly Amid Uninspiring GE Earnings

General Electric reported that adjusted second-quarter earnings were flat at 54 cents per share, with its NBC Universal unit making modest gains to be a middling performer among GE’s six business segments, in an earnings release Friday before the stock market opened.

NBCU segment profit crept up 1% to $909 million for the three months ended June 30. NBCU revenue advanced 7% to $3.882 billion. For the six months, NBCU segment profit was up 2% to $1.621 billion and up 5% on a revenue basis to $7.446 billion.

In a conference call with stock analysts after earnings figures were released, GE brass said just-concluded upfront-advertising sales for its broadcast and cable networks rose to $4.3 billion for the 2008-09 season, up from $4 billion last year. In upfront, NBC ad sales were up just 2% while cable jumped 25%. “That’s a great performance [overall],” GE chief financial officer Keith Sherin told the analysts' conference call.

NBCU’s basic-cable networks were the heroes within the media company, which is 80% owned by GE and also includes feature films, TV programming, theme parks and information businesses. Sherin also cited gains from NBC programs such as The Office and House.

Elsewhere at NBCU, GE executives said ad sales for the summer Olympic Games were $1 billion. Finally, there was weakness in broadcast-TV local ad sales, with revenue down $40 million in the second quarter, but no other details were cited.

“The summary for [NBCU] is robust cable growth, film positioned for a nice second half, a very strong second half and another on-track quarter,” Sherin added.

In the second quarter, GE also booked a $61 million one-time gain on the sale of its portion of Sundance Channel.

Some Wall Street investors called for GE to sell NBCU, but in Friday’s conference call, GE chairman and CEO Jeff Immelt cited it as one of three core business lines (joining infrastructure products/services and financial services).

“We continue to invest in our great media operations,” Immelt told the conference call, briefly noting its pending buy of The Weather Channel. He cited both the NBCU and health care segments for “executing well in a tough environment.”

In general, GE second-quarter earnings were a mixed bag as corporate revenue climbed 11% to $49.7 billion while earnings from continuing operations were down 4%. Unadjusted second-quarter GE earnings actually fell 6% to $5.07 billion, or 51 cents per share, from $5.38 billion (52 cents).

Those earnings met analyst expectations and GE maintained its earnings guidance of flat to 5% profit growth for the year, which is a positive given the weak economy and turbulence in credit markets.

“Our business fundamentals remain strong,” Immelt said in a statement, adding that economic conditions are “volatile.”

But a concern was that profit gains generally lagged behind the percentage increases in revenue at GE and its segments.

Simply meeting Wall Street expectations was an improvement from GE’s first-quarter earnings, when its surprise 6% decline disappointed analysts, knocked down GE’s share price and put GE boss Immelt under pressure. The first-quarter shock included lowering its earnings outlook.

Text for GE’s second-quarter earnings release Friday made no specific mentions of NBCU, which was only listed as line items in earnings tables, perhaps because NBCU was a bright spot and GE is making significant structural changes elsewhere. NBC Television’s mammoth coverage of the Beijing Olympic Games will occur during the third quarter and its pending $3.5 billion acquisition of The Weather Channel with two partners is scheduled to wrap in the fourth quarter.

On Thursday, GE agreed to sell its Japanese consumer-finance business to Shinshei Bank for $5.4 billion. Its giant kitchen-appliances and lighting-products divisions are up for sale or may be spun off, which will downsize the conglomerate with annual revenue that approaches $200 billion.