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NBC Universal profits bounce back, signaling GE agreed to Comcast sale at market bottom

July 16, 2010 | 10:54 am

Comcast Corp.'s timing on its multibillion deal to acquire controlling interest of NBC Universal is looking pretty good right now. General Electric Co. decided to unwind its interest in NBC Universal early last year when the media business seemed to be on the ropes.

Comcast and GE finalized the deal in December and are waiting for regulators to approve the $30-billion transaction. The government's blessing is expected by the end of the year.

On Friday morning, GE released its second quarter-earnings, and operating profit at its media unit was up 13% to $607 million compared with the period a year ago. Revenue at NBC Universal was up 5% to $3.75 billion, which marked the biggest increase of any GE unit. 

Analysts took notice.  "We see significant sequential improvement in the NBCU assets, which makes the timing, structure and cash outlay of the [Comcast] deal that much more attractive to us," Wachovia senior analyst Marci Ryvicker wrote in a report Friday morning.

Operating income for NBC Universal's cable television unit, which includes USA Network, Bravo, Syfy and CNBC, jumped 10%. Cable revenue was up 7%. Even the hard-luck NBC broadcasting division saw its earnings improve 6%. The NBC television station group propelled the climb as its results were up 25%, demonstrating a strong bounce-back of the local advertising market. Overall, broadcasting revenue inched up 1%.

There was more good news at NBC. GE executives said network advertising commitments for the upcoming television season were up 18% compared with the amount of commercial time sold during the 2009 upfront market when advertising sales were hit by the recession.

Revenue at Universal Studios, which includes the Los Angeles-based film studio, increased 6%.  Profits were up $40 million. The current third quarter should be helped by Universal's latest hit, "Despicable Me."

NBC Universal was one of only two GE units to grow revenue during the period. The other was GE's Home and Business Solutions. However, GE's core businesses -- energy infrastructure, technology infrastructure and GE Capital -- all brought in lower revenue compared with the second quarter of 2009.  

As a whole, the industrial giant reported earnings of $3.1 billion for the second quarter, a 16% increase.  Revenue fell 4% to $37.44 billion, due to lower GE Capital assets and lower equipment sales.

While the bounce back in NBC Universal's results looks like GE agreed to exit the entertainment business at the bottom of the market, the timing of the deal has turned out to work in favor of France-based Vivendi, which owns 20% of NBC Universal. As a result of the rise in the value of the U.S. dollar over the last nine months, Vivendi's take-away payment will be worth about 10% more than the $5.8 billion it negotiated last November for its stake.

-- Meg James