NBCU Third-Quarter Earnings Rise, Peacock Loss Hits $614M, Comcast Takes $8.6B Sky Charges

NBCU Third-Quarter Earnings Rise, Peacock Loss Hits $614M, Comcast Takes $8.6B Sky Charges

Peacock, the streaming service of Comcast’s entertainment unit NBCUniversal, grew its third-quarter revenue strongly, but its loss widened again, while NBCU increased its earnings for the latest period by more than 20 percent.

Studios revenue and earnings jumped, helped by the likes of Minions: The Rise of Gru.

Comcast also said that it recorded “noncash impairment charges related to goodwill and intangible assets in our Sky segment totaling $8.6 billion.” The media, telecom and technology giant had in 2018 acquired European pay TV powerhouse Sky for $39 billion. On Thursday, it said the impairments “primarily reflected an increased discount rate and reduced estimated future cash flows as a result of macroeconomic conditions in Sky’s territories.”

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Wells Fargo analyst Steven Cahall wrote in a first reaction note: “The impairment likely marks Sky’s assets down from its purchase price to a new level reflecting lower estimated future earnings.”

Peacock had ended the first quarter with more than 13 million paid subs and 28 million monthly active accounts in the U.S. Paid subs “stayed relatively flat at 13 million” as of the end of the second quarter. And NBCU CEO Jeff Shell told CNBC in early October, just after the end of the third quarter, that paid Peacock subscribers had since then risen to 15 million. The company confirmed that on Thursday, mentioning that Peacock paid subscribers in the U.S. “surpassed 15 million” as of the end of September.

Comcast in its third-quarter financial report on Thursday posted NBCU earnings before interest, taxes, depreciation and amortization (EBITDA) that jumped 24.6 percent to $1.68 billion, even though revenue fell 4.3 percent to $9.57 billion. The prior-year period included $1.8 billion from the Tokyo Olympics, making for a tough revenue comparison.

NBCU’s media unit results included $506 million of revenue and an adjusted EBITDA loss of $614 million related to Peacock. That compared to $230 million of revenue and an adjusted EBITDA loss of $520 million related to the streamer in the prior-year period.

Comcast on Thursday also disclosed latest results at its core cable systems. Broadband users grew by 14,000 amid growth challenges across the cable industry; in the year-ago period, they had grown by 300,000. Third-quarter total video customer net losses came in at 561,000 after a drop of 408,000 in the third quarter of 2021. 

“At NBCUniversal, robust demand from guests at our theme parks and from viewers of our iconic content fueled nearly 25 percent growth in adjusted EBITDA,” said Comcast chairman and CEO Brian Roberts. “And at Sky, our team continues to prudently manage through a difficult and rapidly changing macroeconomic and geopolitical period in the U.K. and Europe. Together, our company is a leader in very large and profitable markets. Despite the challenges that may lie ahead, we are in an enviable strategic and financial position, and our future remains bright.”

Comcast shares were up 7 percent in pre-market trading at 8:10 a.m. ET.

At NBCU’s Studios unit, third-quarter results were helped by such theatrical releases as Minions: The Rise of Gru, Nope, Beast and continued business from second-quarter release Jurassic World Dominion. Studios revenue increased 31.4 percent to $3.2 billion in the latest period, “primarily reflecting higher
theatrical and content licensing revenue,” the company said. “Theatrical revenue increased $366 million to $673 million, primarily due to the successful performance of recent releases, Jurassic World Dominion and Minions: The Rise of Gru. Content licensing revenue increased 16.8 percent, primarily due to the timing of when content was made available by our television and film studios under licensing agreements, including additional sales of content as production levels returned to normal.”

Adjusted EBITDA in the Studios segment jumped from $179 million to $537 million, “reflecting higher revenue, which more than offset higher operating expenses,” driven by increased programming and production expenses due to higher amortization of film and television production costs in the current year period.

Media unit revenue for the third quarter fell 22.7 percent to $5.2 billion due to lower advertising and distribution revenue, “reflecting the comparison to the Tokyo Olympics in the prior-year period.” But excluding the $1.8 billion of incremental revenue from the Tokyo Olympics in that period, media revenue climbed 4.4 percent. Advertising revenue decreased 35.1 percent, “primarily” due to the difficult Tokyo Olympics comparison, “partially offset by an increase in Peacock advertising revenue.” Quarterly distribution revenue dropped 13.7 percent, “reflecting the Tokyo Olympics in the prior-year period and a decline in subscribers at our networks, partially offset by an increase in subscribers at Peacock and contractual rate increases,” the company noted.

Adjusted EBITDA in NBCU’s media unit decreased 41.5 percent to $583 million in the third quarter as the revenue drop more than offset lower operating expenses, primarily due to lower programming and production costs. That reflected lower sports programming costs associated with the Tokyo Olympics in the prior-year period, “partially offset by higher costs at Peacock.

Theme parks revenue rose 42.4 percent to $2.1 billion in the third quarter on increased attendance and guest spending at parks in the U.S. and Japan, as well as “an increase from the operations of Universal Beijing Resort, which opened in September 2021.” Theme parks adjusted EBITDA jumped 88.6 percent to $819 million thanks to the higher revenue, “partially offset by higher operating expenses,” the company said.

Thursday’s earnings report is the first since Comcast recently promoted chief financial officer Mike Cavanagh to the added role of president.