NBC Universal
Peacock, the streaming service from Comcast subsidiary NBCUniversal, increased revenue in the second quarter and narrowed its loss to $348 million, compared with $651 million in the same period a year earlier and $639 million in the first quarter of 2024. The streaming service ended June with 33 million paying subscribers, down from 33.5 million at the end of March, the company also said Tuesday. But it touted a gain from 24 million a year earlier.
“Peacock revenue grew 28% to $1.0 billion” in the most recent quarter, the company also said, touting “the best year-over-year improvement in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for any quarter since its launch in 2020.”
While streaming profits, which have so far been elusive for most industry giants, remain a major focus on Wall Street, Peacock has already reported a loss of $2.75 billion for the full year 2023. But Comcast CFO Jason Armstrong noted earlier this year that “2023 marked the peak of annual losses at Peacock, and for 2024, we expect losses to improve significantly compared to 2023.”
On a morning conference call, Comcast Chairman Mike Cavanagh answered an analyst’s question about when Peacock might become profitable, but didn’t provide specifics. “I don’t really care about Peacock on a standalone basis. I mean, it’s an interesting exercise, and I’m happy to share the numbers on Peacock’s losses as we build it out,” he said.
Cavanagh added that Peacock is evolving in tandem with Comcast’s traditional TV assets. “We’re thinking about this over a multi-year period. I’m confident that what we’re doing around Peacock in the media space, operating together, is going to put us on a path to optimizing that business. And this is a year where we see the growth of Peacock offsetting the decline in some of our linear businesses, and that’s fundamentally a trend that I expect to see continue,” he said.
Peacock recently unveiled price increases that will go into effect July 18 for new customers and August 17 for existing subscribers. The Paris Olympics opening ceremony is scheduled for July 26.
In its quarterly earnings report released Tuesday, Comcast, led by Chairman and CEO Brian Roberts, also disclosed that adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) differed significantly across NBCU’s segments. Peacock’s losses are disclosed as part of NBCU’s media unit.
In a morning conference call with analysts, Comcast’s Roberts denied rumors that the media conglomerate would engage in costly mergers and acquisitions amid industry consolidation. “Rather than engage in a process of buying content businesses, we are primarily focused on organic opportunities like the NBA, one of the most coveted sports franchises in the world, that will help drive our long-term growth,” he said.
On the morning call, Cavanagh revealed that his company has entered into an 11-year TV rights deal with the NBA that includes exclusive games for Peacock to attract new subscribers and retain existing subscribers for the evolving streaming platform. “The long-term goal for Peacock is to have a service that is a balance of sports, entertainment and news,” Cavanagh told analysts.
“Opportunities like this very rarely come along when there’s a long-term relationship to pursue,” Comcast CEO Roberts added on the morning call about the NBA deal and sports content aimed at driving down NBCUniversal’s linear TV and streaming pipelines. “There’s going to be a lot of content on NBC, but a lot more content on Peacock and that enables the trends we’re seeing in viewer behavior,” he added, as TV viewership increasingly shifts to streaming platforms industry-wide.
Meanwhile, Comcast’s core cable and telecommunications business once again lost pay-TV and broadband subscribers in the second quarter. The company lost 120,000 broadband users in the latest period, compared with a decline of 19,000 in the second quarter of 2023. But video subscriber losses narrowed, from 543,000 to 419,000.
Comcast Cable CEO Dave Watson told analysts that the video business is paired with broadband offerings to continue to reduce subscriber losses this year, compared to 2023. “Ultimately, we are focused on value, combining linear streaming considerations on a case-by-case basis,” he told analysts.
In the second quarter, revenue from the company’s media division rose 2.1% to $6.3 billion, “driven by higher revenue from domestic distribution and international networks, partially offset by lower other domestic advertising revenue,” the company said. Domestic distribution revenue, up 5.7%, was driven by higher revenue from Peacock, “driven by an increase in paid subscribers compared to the same period last year.” But domestic advertising revenue fell 1.7%, “primarily driven by lower revenue from our networks, partially offset by higher revenue from Peacock.”
The media division’s adjusted EBITDA jumped 9.0% to $1.4 billion on higher revenue and largely flat operating expenses. “Constant operating expenses were driven by lower marketing and promotion costs and programming and production costs, offset by higher other expenses, each primarily related to Peacock,” the company said.
In the second quarter, studio segment revenue fell 27.0% to $2.3 billion, “primarily due to lower theatrical revenue and content licensing revenue,” which declined 74.1% and 5.9%, respectively. Theatrical revenue was impacted compared to “higher revenue from the volume and strength of theatrical releases in the prior-year period, including The Super Mario Bros. movie. And X fast“Content licensing revenue decreased primarily due to the timing of content being made available by our television studios,” the company said.
Studio adjusted EBITDA decreased 51.4% to $124 million as revenue declined, which more than offset lower operating expenses. “The decrease in operating expenses primarily reflects lower programming and production expenses, primarily due to lower costs associated with theatrical releases,” the company said.
Finally, second-quarter revenue for the amusement parks division fell 10.6% to just under $2 billion. On the morning conference call with analysts, Comcast’s Cavanagh touted the amusement parks division, despite a decline in attendance and revenue at the national parks. “While the parks results were below our initial expectations for the year, we continue to view parks as a great long-term growth business for us,” he said.
Adjusted EBITDA for the theme parks business fell 24.1% to $632 million, “reflecting lower revenues, which more than offset lower operating expenses.”
Comcast shares fell $1.01, or 2.5%, to $38.52 in premarket trading Tuesday as investors digested the company’s latest financial results.