In a season in which NBC has a shaky grasp on third place—only the Super Bowl is saving the network from an ignominious spot at the bottom of the heap—and is in desperate need of a hit, Steve Burke picked a bad time to drop his guard. As Comcast wrapped its Q4 earnings call Tuesday, the NBCUniversal CEO offered an aside to an unknown interlocutor, saying that while The Voice was likely to sustain its momentum, “I think Smash is more problematic.”
The company has a great deal riding on Smash, its new Broadway-themed musical drama. Revenue for NBCU's broadcast division declined 7.1 percent in the fourth quarter against the year-earlier period on a 7 percent decline in broadcast ad sales revenue, to $1.26 billion. The unit was cash-flow negative to the tune of $80 million, which Comcast chalked up to "ratings weakness at the NBC broadcast network," lower political ad spending at NBC's O&Os in an electoral off-year, "lower revenue as well as higher marketing costs" and $28 million in costs related to the the company's acquisition of its majority stake in NBCU.
The network certainly increased expenditures last year. The mammoth 2011 upfront slate included 12 new shows, three of which (Prime Suspect, Free Agents and The Playboy Club) have already been canceled.
As has been the trend so far among media companies, cable fared much better than broadcast. All-important ad revenue was down 2 percent for the fourth quarter but up 8.7 percent for the full year, and cash flow totaled a healthy $3.3 billion for the full year. The cable unit is seeing upticks in licensing fees as well, with a 10.9 percent increase in Q4. This probably describes fees paid by streaming services in addition to fees paid by licensors like Lifetime and MTV for shows produced by Universal Cable Productions, such as Against the Wall and I Just Want My Pants Back, respectively. NBCU's cable assets include USA, Bravo and Syfy, among others.
Overall, Comcast beat Wall Street estimates for its fourth quarter with a 65 cents per share dividend (42 cents was the predicted share price), and it aims to keep it that way. The company has announced a $6.5 billion stock buyback program including $3 billion in share repurchases this year alone. It's a move virtually guaranteed to shore up share prices as the company tries to set right its 51 percent stake in NBCUniversal, its most public asset, as NBCU's film and broadcast divisions suffer declines.
Overall, company execs spent most of their time expressing cautious optimism. "Some of these investments are already paying off, and some will pay off over time," Comcast CEO Brian Roberts said at the beginning of the earnings call, and that assertion was more or less the mantra during the NBCU portion of the presentation.
The company's investment in The Wizarding World of Harry Potter theme park proved a savvy one. The theme park unit was up 4 percent for the quarter and 24.3 percent for the year. Film fared less well, with revenue dipping 1.8 percent year over year for Q4 and cash flow dropping nearly 90 percent for the year, putting the entire studio's cash flow positive by just $24 million for the year. (To be fair, Despicable Me seriously overperformed for Universal last year to the tune of more than $500 million.)