NEW YORK (Reuters) –
NBC Universal's top executive said he hopes the media company has seen the worst of the recession after posting sharply lower quarterly results, but noted advertisers remain skittish and consumers nervous.
NBC Universal's second quarter results on Friday showed an 8 percent fall in revenue and a 41 percent drop in profit, depressed by cutbacks in spending by advertisers and consumers that have hurt the industry for several quarters.
Shares of NBC Universal's majority owner, General Electric Co, fell 5.3 percent to $11.74 after the conglomerate reported quarterly earnings that were undercut by its media and finance businesses.
NBC Universal is 80 percent owned by GE and 20 percent by France's Vivendi SA.
Other top media companies, including Walt Disney Co, Viacom Inc, CBS Corp and News Corp, will post second quarter results over the coming weeks, with investors watching whether predictions executives made three months ago that spending had steadied prove true.
NBC Universal Chief Executive Jeff Zucker, in a memo to staff following the results, said the company is "seeing signs of life in local and national advertising" and is hopeful it will witness "better earnings growth in the second half of the year."
He added, however: "The negatives are the same ones that are dragging down the results of every media company: Advertisers are skittish about the economy and marketing budgets are easy targets."
He also said consumers continued to scale back on discretionary purchases, hurting sales of NBC Universal's DVDs and visits to its theme parks. The latest quarter's results were also hit by a write-down of its ION Media stake and a limited number of DVD releases.
Concerns about media company earnings had been heightened by disappointing results on Thursday from Google Inc, which had weathered the recession better than nearly all of its rivals.
Those worries dragged down shares of top media companies on Friday, with the sector underperforming the broader market. The Standard & Poor's Media index, which includes CBS, Time Warner Inc and Viacom, was down nearly 1 percent in afternoon trade.
"The media sector rallied more than the broader market coming out of Q1 2009 earnings releases, as hopes built that the stage was set for an ad market improvement in the back half of 2009," Pali Capital analyst Richard Greenfield said in a recent report.
"Now the question becomes, will they all begin to shift to a more cautious/negative tone on Q2 calls that begin later this month?"
(Reporting by Paul Thomasch, editing by Gerald E. McCormick)
