NBCU revenue rises, but Peacock loss hits $467 million, paid subscribers stand at 13 million

Peacock, the streaming service of Comcast’s NBCUniversal entertainment division, increased revenue in the second quarter, but its paid subscriber base stagnated and its losses increased, while NBCU increased overall revenue.

After ending the first quarter with more than 13 million paid subscribers and 28 million monthly active US accounts, the company said Thursday that paid subscribers “remained relatively steady at 13 million” at the end of June. . A quarter that was fueled by a variety of extraordinary programming,” including the Super Bowl and the Beijing Winter Olympics, generating a gain of 4 million paid subscribers.

Comcast chairman and CEO Brian Roberts said he was “pleased” with Peacock’s stable customer base and said it was a “very strong recession” that would see renewed growth momentum.

In its second-quarter financial report on Thursday, Comcast said NBCU’s earnings before interest, taxes, depreciation and amortization (EBITDA) increased 19.5% to $1.86 billion on revenue of $1.86 billion. $9.45 billion, an increase of 18.7% more. NBCU’s media unit results included $444 million in revenue and a Peacock-related loss of $467 million in EBITDA. This compares with $122 million in revenue and $363 million in streamer-related adjusted EBITDA loss in the prior year period.

On Thursday, Comcast also released the latest results for its basic cable systems. Broadband customer earnings have stalled amid growth challenges in the cable industry, even as most analysts expected a small gain from Comcast. “Broadband customers of 32.2 million were flat versus Q1 2022, total net loss of video customers was 521,000 and total net loss of voice customers was 286,000,” wrote the Comcast on Thursday. For the prior year period, it recorded total broadband customer net additions of 354,000, video customer net losses of 399,000 and voice customer net losses of 108,000.

Wells Fargo analyst Steven Cahall recently cut his forecast from 70,000 to 60,000. The broadband customer network in the second quarter of 2021 is 354,000. “We continue to expect cable to decline through 2022 (and beyond), driven primarily by accelerating growth in fiber and fixed wireless,” he wrote of the broader industry trend. “Going forward, we see much less room for cable subscriber growth as the entire broadband market approaches full penetration.”

Roberts praised the recent financial performance. “Our second quarter financial results were very strong, with Cable, NBCUniversal and Sky all posting solid growth in Adjusted EBITDA, leading to double-digit increases in Adjusted Earnings Per Share and strong cash flow generation. said. “Most importantly, we achieve this as we continue to invest in the future growth of our business, increasing our return on capital to our shareholders and keeping our balance sheet in top shape.”

In the Cable Systems division, it reported “our highest adjusted EBITDA margin ever recorded, even amid a unique and evolving macroeconomic environment that is temporarily putting pressure on our new customer connection volumes”. At NBCUniversal, Roberts praised “the strong results from the theme parks (which) drove our growth in the quarter, and we look forward to our recent premieres and planned content and live events from our media and studio businesses, including Jurassic World: Dominion, Minions: The Rise of Gru, No, Sunday night football and the (football) World Cup to make a significant contribution later this year, including subscriber growth on Peacock.”

Roberts concluded: “Looking ahead, our company is in an enviable strategic and financial position, with significant cash flow and a solid foundation for innovation.

But Comcast shares are down more than 7% in premarket trading amid slowing broadband numbers.

At NBCU’s Studios division, second-quarter revenue increased 33.3% to $3 billion, “primarily reflecting higher revenue from content and cinema licensing.” Theatrical revenue increased from $352 million to $550 million due to an increase in the number of theatrical releases, “including blockbuster releases. Jurassic World: Dominion.” Content license revenue increased 19.0%, driven by television content licenses.

However, Adjusted EBITDA in the Studios division dropped from $155 million to $1 million in the last quarter, “reflecting higher operating expenses that offset higher revenues”. The higher costs were driven by higher programming and production costs, which the company said reflected higher amortization of film and television production costs, as well as higher advertising, marketing and promotion costs ahead of final release. Jurassic World: Dominion s Minions: The Rise of Gru.

“Production has returned to pre-pandemic levels,” Comcast CFO Mike Cavanagh said during the earnings call.

At NBCU’s Theme Parks division, quarterly revenue increased 64.8% to $1.8 billion due to increased visitor spending at its American and Japanese parks. “Universal Beijing Resort was closed for most of the second quarter of 2022 due to local COVID-19 prevention and control requirements, and then resumed operations in late June with limited capacity,” the company emphasized. Theme parks adjusted EBITDA increased $411 million to $632 million, “reflecting higher revenues, partially offset by higher operating expenses.”

During the earnings call, management highlighted that participation at national theme parks is now higher than pre-pandemic levels, which NBCU CEO Jeff Shelley attributed to strong per capita spending due to the COVID-19 pandemic.

NBCU’s media unit reported second-quarter revenue up 3.6% to $5.3 billion thanks to an 8.4% increase in distribution revenue “driven by Peacock growth and higher contract rates.” , partially offset by the decrease in subscribers on our networks”. In media revenue, however, advertising revenue declined by 1.3%, “reflecting lower ratings in the current year period and a greater number of sporting events in the prior year period, partially offset by higher prices and additional Peacock sales,” the company said. . For example, NBC lost the rights to NHL games.

Adjusted EBITDA in the media division fell 2.9% to $1.3 billion in the second quarter. The company attributed the higher operating costs “primarily to Peacock’s higher costs”.

Kavanagh reiterated earlier guidance that Peacock’s EBITDA loss would be about $2.5 billion in 2022, with greater losses in the second half, particularly the fourth quarter.

Roberts further analyzed broadband customer trends in the earnings call. While the company has added broadband customers over the past 12 months, connection activity has slowed for three reasons, while customer churn has remained low. He said the main reason for the low connections was a “dramatic slowdown” in the movement of people. At the same time, the COVID-19 pandemic has also allowed Comcast to gain share, a factor that has been decreasing recently. Finally, competition has increased, the Comcast boss noted, but argued that it will have a “temporary” impact and is largely focused on the customer “value” space.

Kavanagh said later that the weak trends in broadband customers continued into the beginning of the third quarter, with losses reaching around 30,000 for the quarter, but he added that Julio suele was a weak month before the return activity began school.

However, Roberts said he was generally inclined to see the company return to broadband customer growth.