Comcast Exceeds Expectations with Slight Gain in Broadband Subscribers

Comcast Exceeds Expectations with Slight Gain in Broadband Subscribers

Comcast Third-quarter results on Thursday beat analysts’ estimates, despite a slight decline in revenue and continued weakness in broadband customer growth.

Shares of the company jumped more than 7% on Thursday morning.

Here’s how Comcast fared in Q3 2022 compared to what Wall Street expected, based on a Refinitiv analyst survey:

  • Earnings per share: 96 cents, adjusted against 90 cents expected
  • Revenue: $29.85 billion vs $29.65 billion expected

The company said it added 14,000 broadband customers in the quarter, an improvement from the second quarter, when Comcast first added no new customers. Still, it’s a sign that cable broadband providers are facing increased competition from telecommunications and wireless internet companies.

The slowdown in new customers is hitting the cornerstone of Comcast’s business, along with peers like Charter Communications and United States. AT&T said last week that building out its fiber optic network remains a priority for the company and that it added 338,000 new customers during the quarter.

“It’s still a difficult environment,” Comcast CEO Brian Roberts said on Thursday’s call with investors, noting that fewer and fewer people are moving to new homes in the United States, as well as increased competition from new market entrants.

Comcast’s revenue fell 1.5% to $29.85 billion from the same quarter last year, when the company’s NBCUniversal unit raked in more ad dollars from broadcasting the Tokyo Olympics on its television networks. The company also took an $8.6 billion write-down on its UK Sky business due to macroeconomic challenges affecting Europe as the war in Ukraine rages on.

Its adjusted earnings before interest, taxes, depreciation and amortization rose 5.9% to $9.5 billion from the same period last year.

Meanwhile, Comcast’s cable unit, which includes pay-TV, mobile and traditional phone services in addition to broadband, saw revenue rise 2.6% to $16.5 billion. The company said broadband revenues jumped 5.7% due to an increase in average rates and the number of its residential broadband customers.

Its Xfinity Mobile business, launched five years ago and based on VerizonThe wireless network now has 5 million customer lines.

Comcast lost 561,000 pay-TV customers, a continuing quarterly decline the company and its peers have seen in recent years due to the rise of streaming services.

Peacock, the company’s fledgling streaming service, surpassed 15 million paying customers, a 70% increase year-to-date, the company said Thursday.

Revenue for the NBCUniversal unit fell about 4% to $9.6 billion from the same quarter last year when the Tokyo Olympics took place and added $1.8 billion revenue to the media segment. NBCUniversal’s Media segment includes its broadcast and cable television networks and streaming.

On Thursday, Comcast Chief Financial Officer Mike Cavanagh said the company expects its media business, excluding Peacock, to be affected by the cord cut and some deterioration in the advertising market due to economic uncertainty.

Due to the absence of the Olympics, revenues from the media segment decreased by approximately 23% to $5.23 billion. It would have been up 4.4% excluding the Olympics. The segment’s advertising revenue fell 35% for the same reason, although the company said this was partially offset by an increase in advertising revenue from Peacock.

Revenue from NBCUniversal’s movie studios rose 31.4% to $3.2 billion due to higher revenue from theaters and content licensing. The company said theater revenue in particular nearly doubled to $673 million, largely due to the releases of “Jurassic World: Dominion” and “Minions: The Rise of Gru.”

NBCUniversal CEO Jeff Shell recently told CNBC that he thinks the company’s film business is working well on the hybrid model of releasing certain movies simultaneously in theaters and on the Peacock streaming service — like his latest installment in the Halloween franchise – still waiting. to make others available to viewers at home, such as the Minions.

Peacock posted a loss of $614 million in earnings before interest, taxes, depreciation and amortization, and Comcast said Thursday the company still expects Peacock to post losses of $2.5 billion this year.

The company’s theme park business has maintained its strong rebound since the early days of the Covid-19 pandemic, when theme parks were closed. Revenue rose more than 40% to $2.1 billion as more people thronged theme parks in the quarter.

In the UK, Comcast’s Sky saw its revenue fall 14.7% to $4.3 billion, but said that excluding the impact of the currency change its revenue was consistent with the same quarter of last year. Sky’s total customer base rose by 320,000 to 23 million, boosted by streaming customer additions.

The $8.6 billion writedown on Sky’s business came as the strengthening dollar affected business on a monetary basis, and the war in Ukraine and inflation further affected Europe.

Comcast shares hit a 52-week low of $28.39 on Oct. 13. As of Wednesday’s close, stocks are down about 37% so far this year.

Disclosure: Comcast is the parent company of NBCUniversal, owner of CNBC.

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