RCA Earnings Rise 29% on 1.7% Revenue Gain

RCA said Monday that its first-quarter profit jumped 29% from a year earlier despite a modest 1.7% gain in revenue. The company said the improved results reflected higher earnings from its broadcasting, defense and record/video operations. In particular, RCA said profit at its National Broadcasting Co. unit nearly tripled from a year ago.

However, earnings fell at RCA’s consumer-electronics and Hertz Corp. car-rental units, reflecting severe pricing competition in those industries, RCA said. The company’s communications division posted flat results.

Overall, RCA’s net income rose to $65 million in the quarter ended March 31 from $50.3 million a year earlier.

In the year-earlier quarter, RCA took a $175-million write-off to reflect its decision to fold production of its videodisc player, a machine that played prerecorded movies much as a stereo plays records. RCA managed a profit in that quarter, however, thanks to a $75.7-million accounting change.

First-quarter revenue totaled $2.4 billion, up from $2.36 billion.

RCA’s financial performance has improved substantially over the past two years following RCA’s decision to divest most of the assets that are unrelated to its three core industries--broadcasting, electronics and communications.

An exception to that strategy is Hertz, which has remained attractive to RCA because of the investment tax credits and depreciation allowances that Hertz generates.

But in the latest quarter, Hertz’s profit was “off substantially,” depressed by “a combination of a highly competitive domestic car-rental market and lower profits from the sale of used cars,” Robert R. Frederick, RCA’s president and new chief executive, said at a meeting with securities analysts.

Frederick also said that near-term “profit improvements will be difficult to achieve” at Hertz because of continued downward pressure on prices.

The same is true in RCA’s consumer-electronics business, which includes television sets and videocassette recorders, he said. Because of the heavy competition from Far East suppliers, “we simply must do an even better job of lowering costs” to bolster earnings, he said.

RCA’s solid-state division also struggled in the latest quarter, reflecting the industrywide slump in sales of semiconductors and other integrated circuits, Frederick said.

The broadcasting division continued to improve, however. Although RCA does not break out the quarterly results of its various operations, it said NBC’s first-quarter earnings were the highest in its history, as were those for the TV stations that RCA owns.

RCA’s broadcasting unit drew particular attention from analysts for two reasons: the planned merger of American Broadcasting Cos. and Capital Cities Communications and a recent federal rule change that allows a company to increase the number of TV stations it owns to 12 from seven.

Both developments have fueled speculation that TV networks and stations are now much more valuable, and, subsequently, are increasingly being eyed by potential suitors.

But RCA Chairman Thornton F. Bradshaw made it clear that there are no plans to sell or spin off NBC. Noting that the analysts meeting was held in an NBC studio, he said: “I want to assure you that next year we will meet in this or any other NBC studio; NBC will still be our host.” Bradshaw later was specifically asked if RCA would consider spinning off NBC, and he replied: “No.”

Last week, CBS said its first-quarter profit fell 57% from a year earlier while revenue slipped 2%. ABC, the parent of the third major TV network, has yet to report its first-quarter results.