NBC U Perks Up a Bit for Its New Owners

This should make the folks in Philadelphia feel a bit better about their purchase-to-be: GE says that its NBC Universal unit, soon to become a Comcast property, had a decent third quarter.

Unofficially, that is. For the record, GE says that Jeff Zucker and company booked flat revenues and saw operating profit drop by 15 percent. But a year ago NBC had booked a gain after moving around ownership stakes in the A&E TV venture it co-owns with Hearst and Disney.

Strip those one-time benefits out, GE says, and its 2010 Q3 would show a seven percent revenue hike and a five percent bump in operating profit.

That’s better. “A pretty solid quarter,” in the words of GE CFO Keith Sherin.

Here’s GE’s highlight reel for the business, which Comcast will likely own by the end of the year. (Click to enlarge.)

Meanwhile, Zucker, who has a few months left on the job, is much, much more enthusiastic about his company’s performance. Here’s his all-hands letter to employees sent out this morning:

GE reported its earnings today, and I wanted to take the opportunity to congratulate everyone on NBCU’s very strong results. Looking just at our operations, these are our best third-quarter results since the NBC-Universal merger more than six years ago. Truly a record performance.

Although our segment profit as reported by GE shows us down, this is driven by the impact of one-time, non-operating events and transactions that took place in the third quarter of last year (such as the one-time gain from the change in our interest in A&E Networks). On an operating basis, our profit was up 32% versus last year (or 5% excluding the impact of charges taken by certain divisions in the third quarter last year). Given that the economy, although improving, is still far from robust, these are excellent results driven by superior execution throughout our operations.

We had exceptional performances from a number of our divisions, including Cable Entertainment, Local Media, Film, and Theme Parks. Cable Entertainment posted a double-digit increase in operating profit, behind great results at each of our networks. Local Media was up an amazing 87%, as increased revenues from a resurging local ad market hit the bottom line. Film op profit was up 57%, driven by Despicable Me, which performed well ahead of expectations. And Theme Parks had the best quarter in its history, with op profit up 59%, the result of the new Harry Potter attraction in Orlando and the new King Kong 360 in Hollywood.

Here are some of the other highlights:

· USA was the No. 1 cable entertainment network for the 17th quarter in a row, an incredible string of success, and Syfy finished the quarter ranked No. 8 in adults 25-54

· Bravo had its best quarter ever and now has 20 consecutive quarters of ratings growth, and Oxygen had its best 3rd quarter ever

· CNBC posted increases in both revenue and op profit, and MSNBC continues to operate from a position of strength, beating CNN in primetime for the 4th quarter in a row and beating CNN in total day for the first time in a decade, while also launching a very exciting new marketing campaign

· Through the first five weeks of the NFL season, Sunday Night Football is averaging nearly 22 million viewers, the most for the first five weeks of a primetime NFL package in 14 years

· NBC is tied for No. 2 through the first three weeks of the new season, up 4% versus a year ago to make it the only major English-language network to grow year-to-year

· Jay Leno continues to be No. 1 since returning to his old timeslot, and Jimmy Fallon holds a 35% lead over CBS in his time period

· NBC News remains No. 1 across the board and recently hosted a fantastic public-service programming event called Education Nation, an effort that should make us all proud to be part of this company

· Telemundo has the highest-rated novela in its history with Donde esta Elisa, and mun2 had its best quarter in all key demos

There is so much to be proud of! Congratulations and thanks again to everyone, because I know, whether you are part of one of the businesses mentioned above or not, you are working hard to keep this company great, and I truly appreciate it.

At the same time we are notching these business successes, our transition teams are hard at work preparing for the new NBC Universal. We’re on track for a close of the transaction with Comcast, hopefully by the end of the year. As I’m sure you know, the timing will ultimately be determined by the FCC and the Department of Justice. We’ll have a clearer idea about timing as we get into November.

One other thing about the transition. You have received information about your new benefits, and I urge you to pay attention: review the information on the intranet, attend the benefits sessions, and enroll yourself and your family in both the GE and the new NBC Universal benefits plans. I hope each of you give this the attention that it deserves.

The company is really in a terrific place right now. We have a Cable Entertainment group that is on track to record its fifth straight year of record earnings. A Theme Parks division that is on track to have its best year ever. A Local Media division that will likely more than double its earnings from a year ago … and much more. And making it all happen are 15,000 employees who love this company, understand what we do, and are committed to doing it better and better every day. Thank you very much. Your strength of character, and the strength of our operations, will ensure a strong end to this year.

Three Cool iPad Ads

Earlier this week we got Condé Nast’s instructions on how to make a killer iPad ad. Now, three examples of some good ones.

These come from mobile ad start-up Medialets, which put together a highlight reel at my request. The video doesn’t quite do these things justice, because you really have to see them on Apple’s tablet to appreciate them. But take a look, anyway–it’s probably best if you view these in full-screen mode–and I’ll try to tease them out for you afterward:

Here’s what you just saw:

  • FedEx ad, designed for Newsweek app.
  • Visa ad, designed for NPR app with help from AKQA, Visa’s regular digital agency. Features e-commerce possibilities, without leaving the app, via Fandango.com and Broadway.com
  • Toyota Prius ad, designed for Weather Channel Max app; allows users to “draw” images incorporated into video.

Again, the market for this stuff is so new that shops like Medialets are essentially starting from scratch each time they put together a tablet ad. And that means there’s no reason for these things not to be interesting–you’ve never seen them before.

But eventually some of this stuff will become more standardized, just as most Web ads are. And that will make it harder to stand out.

France Will Buy Its Citizens Digital Music Worth €50 Million

Music headphones on a laptop

Nearly two years ago, France announced plans to help save its news business by giving every citizen a free newspaper subscription on their 18th birthday. Now it also wants to help them buy digital music, too.

Reuters reports: “Under the scheme, French residents who purchase a card - the Carte musique - to download music from subscription-based website platforms, will only pay half the cost of a €50 ($70.51/£43.96) credit included in the card, with the French government paying the rest.”

Both measures point to how France is trying to instill in its young a habit for buying content, using incentives from the public purse. The music scheme will last two years and will be open to those aged 12 to 25, who will be able to apply for one carte musique per year.

The European Commission’s competition department, here, says the plan does not fall foul of the bloc’s state aid rules, stating: “The French government expects one million cards will be sold each year.”

That would seem to equal a €25 ($35.25/£21.98) million annual state expenditure on subsidising legal digital music - the same amount by which the sector would benefit in kind, of course.

The subsidy’s approval came as 3.5 million citizens turned out to protest austerity measures including raising France’s minimum retirement age from 60 to 62 to combat its budget deficit. The protests are risking a national petrol shortage.

The digital music plan is the equivalent of buying 38.7 million downloads over two years for citizens from iTunes Store, where singles cost €1.29 ($1.82/£1.13) each ($1.82 (£1.13)/£1.13 ($1.82)). But it won’t only benefit Apple (NSDQ: AAPL) - the amount by which any one operator can benefit will be capped at €5 ($7.05/£4.4) million.

Reuters: “In return for the state aid, website operators will be required to cut the price of music, extend the duration of subscriptions, and contribute to the cost of advertising the card.”

This is not the only French measure to support the sector - earlier this year, it introduced an agency, Hadopi, to oversee the monitoring, warning and, ultimately, disconnection of consumers found illegally transferring songs online.

The commission warmly welcomes the idea, saying: “The measure is well designed to achieve its objective, is limited in time and scope and contains safeguards to limit potential distortions of competition.

“We welcome initiatives from member states to increase the availability of music online at a lower price for consumers and through legal distribution channels. Music online is certainly a driver for the success of the internet and for economic development.”

Confirmed! Apple Coming to Verizon–To Sell iPads

Apple and Verizon have yet to announce an iPhone deal. But this sure gets them pretty close: The carrier is going to start selling iPads.

Apple (AAPL) still has an exclusive wireless relationship with AT&T, but Verizon will step around that hurdle by bundling the Wi-Fi version of Apple’s tablet with its own wireless MiFi hotspot device. It will sell an iPad-specific wireless plan that will give users a gigabyte of data for $20 a month.

Verizon (VZ) will also sell Wi-Fi iPads without a wireless bundle; sales begin October 28. Meanwhile, it hasn’t abandoned AT&T (T), and will begin selling its tablets through that carrier’s stores on the same date.

Apple’s Ping Wants Rock ‘n’ Roll, but No Sex and Drugs

Ping may never move beyond the “interesting idea, executed poorly” stage. But it might! And in any case, it’s Apple, so if you’re a music act you ignore it at your own risk.

Which means those acts need to create a “profile” for Steve Jobs’s social network. An Apple (AAPL) document making the rounds (Apple has confirmed its authenticity to me) explains how. You can read the whole thing at the bottom of this post.

Most of it concerns technical specs about things you don’t care about, like video formats. Here’s one part you might be interested in–some of Apple’s edicts regarding the content of artists’ profiles:

  • Videos, photos, and text posts should not contain pornography, hate speech, racism, nudity, or any references to or depictions of drug use.
  • Posts should not include advertisements or links to sites outside of iTunes.
  • Posts should not contain links to other content providers.

The first item is sort of obvious, but still worth noting. Because theoretically, if the Beatles ever do make it to iTunes, they’re going to have a hard time promoting some of their songs. Like this one.

But that rule seems like the kind of thing that Apple can change or ignore at will–just like its “no porn except sometimes” ban in the iTunes app store. And anyway, artists have always found ways to put up with, or ignore, these kinds of restraints.

The rules about not posting to links outside of iTunes are more worrisome. Because it’s telling music acts to ignore the digital assets they’ve painstakingly built up on MySpace, Twitter, Facebook and anywhere else on the Web.

Makes sense for Apple, but not for anyone else.


PlayFirst Raises $9.2 Million For Social Game Expansion

PlayFirst Diner Dash

Casual gaming firm PlayFirst has raised $9.2 million in its latest round of funding, which it will use to fund an expansion into mobile and social games. As part of the move, it has hired Eric Hartness, a former chief marketing officer at payment firm PlaySpan as its VP of social games. PlayFirst has historically been known for its downloadable games and online titles, although lately it has been launching games for Facebook and iOs. Chocolatier, for instance, which launched on Facebook over the last year, already has 800,000 monthly active users on the social network.

PlayFirst says $5.2 million of the round is new funding provided by the company’s existing investors, while the remainder is debt financing from Comerica Bank. The funding brings PlayFirst’s total backing to more than $35 million since the company was founded in late 2004. Previous backers include DCM, Mayfield Fund, Trinity Ventures and Rustic Canyon Partners. Some more details in the release here.


Hulu’s "Modern Family" Problem

Hulu’s pitch to viewers: We have all the great network TV shows you want to watch, for free. The pitch for Hulu Plus: Pay us $9.95 a month and you can watch even more episodes of those same shows.

But Hulu Plus can’t show subscribers all of the episodes of all the shows in Hulu’s catalog. Rights issues mean that certain shows will flit on and off the service, and it’s up to subscribers to figure that out for themselves.

Example: “Modern Family,” ABC’s award-winning hit sitcom, disappeared from both Hulu and Hulu Plus this summer after its first season. Now it’s back. But both services are only offering shows from the current season–there’s no way to go back and catch up on last year’s shows, even if you’re paying.

I think, but haven’t been able to confirm, that this has to do with DVD sales for the show, which is produced by News Corp.’s (NWS) 20th Century Fox. I’ve got queries into both Fox and Disney’s (DIS) ABC to try to confirm.

Meantime, here’s what Hulu has to say:

Yes, the first season of Modern Family is no longer on Hulu Plus. We acknowledge this can sometimes be confusing for TV fans, so we do all we can to provide as much advance notice as possible when shows are slated to come down. Below is an example from our Saturday Night Live show page on Hulu Plus. You’ll notice it says “New episodes are posted Sunday afternoons and are available for 17 days.” This is consistent across all our content.

Of course, we keep content on Hulu and Hulu Plus for as long as possible. We can’t offer a specific reasons why a particular video may be taken down, as streaming clearances differ from show to show.

And sure enough, if you head to each show’s Hulu page, you’ll find a different set of availabilities.

Regular Hulu users can only see the last five episodes of “The Family Guy,” for instance, while Hulu Plus subscribers can see all nine seasons. But even if you’re a paying customer, Hulu can only show you five episodes of “The Simpsons,” period.

Meanwhile, the last season of “Lost” fell off both the free and paid services last month, and the other five seasons will go away at the end of the year. Etc.

To be fair to Hulu, it’s certainly not the only service negotiating the frustrating rights/windows patchwork. Everyone who deals with digital media has to navigate this stuff. And none of it makes sense to viewers who just want to watch their shows, when they want to watch them.

But the patchwork is a bigger deal for Hulu, because the service’s primary pitch is that it’s a one-stop shop for all your TV viewing (or at least your broadcast TV viewing). Instead it’s really closer to a half-stocked Super Target: There’s a lot of stuff in there, but you still may not find what you need.

Hulu competitor Netflix (NFLX) offers lots of TV shows via its paid streaming service, too. But it pointedly doesn’t play up the presence of any particular show–Reed Hastings and company simply tell consumers that they’ll find shows they like.

But if you’ve ponied up $10 a month for Hulu Plus and find that you still can’t watch a show that aired a few months ago, you may not be cool with that at all.

Gaps in Hulu’s free service may not be as frustrating for users, because they’re not out any cash. But it is a problem for the joint venture as it ponders a public offering, premised on the notion that its TV partners/owners–ABC, Fox and GE/Comcast’s NBC–are in it for the long haul.

But if Hulu can’t tell users that it has all the rights it needs, how can it convince investors?

Meanwhile, a similarly confusing story: