Comcast beat expectations for first-quarter earnings on Thursday as broadband boosted revenue, even as the company and its peers have seen customer growth slow.
Here’s how Comcast performed, compared to the estimates of analysts surveyed by LSEG:
- Earnings per share: $1.04 adjusted vs. 99 cents expected
- Income: $30.06 billion versus $29.81 billion expected
For the quarter ended March 31, net income rose 0.6 percent to $3.86 billion, or 97 cents a share, from $3.83 billion, or 91 cents a share, a year earlier. Adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, fell 0.6 percent to about $9.4 billion.
The company’s revenue rose 1.2% to $30.06 billion compared to the same period last year. Revenue from the home broadband segment fueled that growth as rates rose, even as Comcast lost 65,000 customers during the quarter.
Comcast stock traded down about 6% on Thursday.
Broadband races
Cable broadband customer additions have declined in recent quarters and weighed on share prices.
A slowdown in home sales due to high interest rates has led to a decline in new home internet connections. Cable providers have also been hit by increased competition for home broadband from wireless companies such as T mobile and Verizon.
Mike Cavanagh, chairman of Comcast, said in Thursday’s earnings call that the market is “extremely competitive,” especially for “conscious customers.”
Earlier this month, Comcast said it would launch NOW, a low-cost month-to-month prepaid plan. The plan is designed to provide stable wireless options at a low cost.
The plan complements Comcast’s long-standing Internet option for low-income customers, called Internet Essentials.
Company executives don’t expect improvement in the near term, particularly with the expected end of the federal government’s Affordable Connectivity Program, or ACP, which offers a $30 discount on broadband service to qualifying low-income households, in April.
Comcast’s wireless business saw a 21% increase in customers during the quarter to 6.9 million total lines. The company lost 487,000 cable customers during the quarter as consumers continued to cut the cord in favor of streaming.
Hot movies, cool theme parks
Sign for the movie “Oppenheimer” in Times Square, New York, on July 29, 2023.
Adam Jeffery | CNBC
Adjusted EBITDA at the company’s theme parks decreased 3.9% to $632 million during the quarter due to an increase in operating expenses such as higher marketing and promotional costs, as well as the negative impact of foreign currency.
On Thursday, Cavanagh noted that attendance at the Orlando theme park “felt some pressure” in the most recent quarter as the company is in the midst of introducing new attractions. He added that the company is confident of long-term growth and future opportunities for its parks.
Increased competition, particularly from cruise lines, has also affected theme parks, Comcast Chief Financial Officer Jason Armstrong said on Thursday’s call.
Likewise, earnings for the media business, which includes NBCUniversal and studios, also fell. The three businesses are now reported in the same segment, which overall saw revenue rise 1.1% to $10.37 billion.
Still, Comcast executives are touting Universal Pictures’ film strength, from recent Academy Award winners “Oppenheimer” and “The Holdovers” to upcoming highly anticipated films like the adaptation of the Broadway hit “Wicked.”
Peacock, which executives also highlighted as a bright spot and boost for NBCUniversal, is also reaping the benefits of the film.
Being the exclusive home of “Oppenheimer” when it first came to streaming earlier this year proved to be a win for the platform. Comcast said it was the most-watched movie in Peacock history.
The service added three million paid subscribers during the quarter, bringing its total number of customers to 34 million. The National Football League’s exclusive Wild Card game at the Peacock helped add and then keep more customers than expected, executives said on Thursday’s call.
“We’re 3.5 years in, we’re at a place where we’re really seeing traction in our approach,” Cavanagh said Thursday, pointing to the power of combining sports and entertainment.
While Peacock is known for its extensive live sports offering, including the NFL and Premier League, Cavanagh said subscribers spend 90 percent of their time on non-sports programming on shows like the Peacock original “Ted” and its movie collection Universal. He added that the company expects Peacock to have “real pricing power” over time.
Revenue for the streamer rose 54% to $1.1 billion compared to the same period last year. While domestic advertising remained flat during the quarter, the company saw domestic distribution revenue increase, driven by growth at Peacock. Media companies faced a bigger than expected buy soft advertising.
Losses stemming from Peacock weighed on the segment and offset higher revenue. The company saw an adjusted EBITDA loss of $639 million related to Peacock during the quarter. That improved, however, from an adjusted EBITDA loss of $704 million in the same period last year.
Peacock losses are said to peak in 2023 and executives expect them to decline in subsequent quarters. The Olympics in Paris this summer should also drive growth for the streaming service.
With more hours of the Olympics on the NBC broadcast network than Peacock, the company is on track to generate the most advertising revenue in its history for the Olympics.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.