On GE's Fiscal 2Q conference call, executives discussed challenges faced by its NBC business:
Jeffrey R. Immelt -Chairman and Chief Executive Officer
NBCU had a tough quarter, but it came out exactly as we outlined it. Revenues were flat and segment profit was down about 10%. The profile is the way we thought it was going to happen.
Prime, stations and TV production OP profit was down about 45%, just as we said. You know, the third quarter now will be the final quarter where we are dealing with the up-fronts from last year, so that is playing out as we expected. But we are making progress.
When you look at the balance of the business, OP profit was up 5% and there are a lot of bright spots. The summer ratings have been up 10%. News cable OP profit was up 28% in the quarter. CNBC is performing very well. MSNBC Prime is up. Entertainment cable is fantastic. USA is the number one cable network.
Finally, in the quarter, we did have the station sales that we talked about in the first quarter and they offset the gain we had last year from IACI and Paxson, both of about the same amount, around $200 million.
I think the most positive highlight for NBCU is with the third quarter being the last quarter where we are comparing to last year’s up-front impact, we look at the profile going forward, the third quarter is kind of similar to the first half -- OP profit down 5% to 10%, but then we turn positive in the fourth quarter. That is just terrific news.
We are committed to this business and we are making progress. If you look at the results on the right side, first, the total the total up-front for the ‘06/’07 season ended at $3.85 billion. That includes prime plus NFL plus cable plus all the other day parts, but that is up 0.5%. The team has done a terrific job with that.
We feel great about the early response to our to our new primetime lineup. We got a lot of good buzz about the shows Studio 60, Friday Night Lights, Heroes, Kidnapped, 30 Rock, and we’re getting tremendous feedback on the NFL, so we feel great about our position as we go into the fall here.
Second, outside of prime, we are winning everywhere else. Telemundo is positive, cable is positive, everything around news and Today is positive, local is winning. In Telemundo, we received two-thirds of every dollar growth in the unit, Hispanic, up- front. The Today Show has a 20% lead in viewers, and it has been stronger than ever in the last four weeks. There is a lot of positive across this portfolio...
David Bleustein - UBS
Okay (about)... NBC, what was the total comparable pricing for the current up-front season? You mentioned the total up-front was up 0.5%, but what was the, if you had to use an apples-to-apples pricing number?
Keith Sherin - Senior Vice President and CFO
It is hard to split it. On prime, it was down right around 5%, I think, on the CPM’s. On cable we had places that were up. Overall it was down a little bit, but again, a couple of things that helped us there. Number one, we had the NFL. Number two, we had our digital strategy, where we pulled a lot of programs in and that helped us to be able to get up slightly on the up-front in total. Number three, we had all the great performance across the cable and other day-parts and late-night. So prime was still a little pressured on CPM. I think we are probably right now at parity with other networks on CPM’s, and that is good news as we look going forward. We can deliver on our schedule.
Jeffrey R. Immelt
Yes. David, the only thing I was going to add to what Keith just said is we do not need the prime time network to be big-time positive next year for '07 earnings to be up at NBCU, based on what the business model is. I think what Keith talked to, which I think is encouraging, is the rest of NBC Universal is performing very well right now, so that gives us good momentum as we look at fourth quarter and '07.
David Bleustein - UBS
Okay. Two other little ones -- the Nielsen ratings on commercial spots, do you think that is going to have any impact?
Jeffrey R. Immelt
Too soon to say, but I think it is inevitable. I think it is kind of the way we have done our own business planning. It comes back to you have to have good content, and that is what our business model has always been about.