General Electric Chairman-elect Jeffrey Immelt admitted to not knowing much about the television business when he told reporters last week that he's counting on NBC President and GE Vice Chairman Bob Wright to teach him all about it.
But the soon-to-be-head of GE knows a lot about financial performance. Last week, he said that the 20% annual-growth benchmark that current GE Chairman Jack Welch has demanded from his division heads will remain the standard under his watch. And when asked specifically about GE's network-television subsidiary last week, Immelt said NBC contributes "a tremendous amount both financially and in best practices" to GE.
Indeed, sources familiar with the numbers say NBC will post a record $6.7 billion in revenue for 2000, making it the fourth-largest GE division (just below the $7 billion Medical Systems division that Immelt most recently ran). That's up 20% over 1999. Operating profit for the year will be approximately $1.8 billion, up 14%, with net income of about $955 million, up 14%.
Since 1994, NBC has exceeded the 20% growth mandated by GE, its annual earnings averaging 21%.
Pretax earnings for the NBC Television Network will total approximately $520 million, up 10%, and profits at the owned TV stations will reach $690 million, up 30% from last year. Sources credited the strong ad market for the first 10 months of the year (including the Sydney Olympics and the political campaigns) as the primary driver.
NBC News will be the single biggest contributor to network operating profits for the network this year, the news division posting nearly $300 million in profits. News profits have grown an average 34% since 1994.
The big contributors within the news division, sources say, are the
Today
show, which expanded to three hours and continues to dominate its time period; prime time magazine
Dateline; and a resurgent
Meet the Press.
The news division continues to leverage its resources across other media, including cable and the Internet. This year, MSNBC will turn a profit for the first time, on revenues of $250 million.
NBC's cable division will generate pretax earnings of $400 million this year, up 40% over 1999. The cable unit will post $880 million in revenues, including $590 million in ad sales (up 24% from 1999) and $290 million in subscriber fees from cable operators (up 72% over two years). Sub fees are expected to climb another 43% by 2002, to $415 million.
CNBC will post revenues of $490 million this year, up 28%, with $290 million in pretax earnings, up 45% from 1999. Since 1997, CNBC has grown profits by an average 34% annually, sources say.
The company is still sorting its way through various Internet initiatives and will lose $170 million on those activities in 2000.
But executives expect such investments to pay off over time. NBC has invested $1.2 billion in cash over the past eight years or so in various cable and broadcast ventures, including Rainbow Media, Paxson Communications, CNBC and MSNBC, A&E, and Valuevision. The combined value of those investments is estimated at $12 billion to $13 billion.
