Comcast Burdened by Covid-19 Impact on Theme Parks, Movie Studio--Update

By Lillian Rizzo 

The coronavirus pandemic continued to affect the performance of Comcast Corp., a cable and entertainment conglomerate that suffered from limited capacity at theme parks and movie theaters but signed up a record number of broadband subscribers in the latest quarter.

The Philadelphia-based company, owner of Xfinity-branded services, the NBCUniversal media empire and the Sky television business, said third-quarter net profit fell 37% to $2.02 billion, or 44 cents a share, from $3.22 billion, or 70 cents a share, a year earlier.

Revenue slipped 4.8% to $25.53 billion from $26.83 billion. Both numbers topped FactSet analysts' estimates of per-share earnings of 43 cents and revenue of $24.74 billion.

Comcast's Universal Studios theme parks have been hit hard by the pandemic. Its parks in California have been closed since March, and there is limited capacity at those opened in Florida and Japan, prompting the company to lay off a large number of employees. Theme-park revenue fell 81% to $311 million from $1.63 billion a year earlier.

Comcast executives said the theme-park business is expected to break even next year, depending on how the pandemic evolves.

"When the world returns and people are sick of being in their house, I really feel the parks business is going to be a strong business," NBCUniversal Chief Executive Jeff Shell said on Thursday's earnings call. "But no one can tell the pace of how that's going to go, given how things are happening."

Comcast's theme-park struggles were partly offset by its broadband business, which posted 633,000 subscriber additions, a record. As more people rely on home broadband during the coronavirus pandemic for work and school, providers have experienced a surge in customer growth in recent quarters. Broadband, the centerpiece of Comcast's business, reported a 10% increase in revenue to $5.2 billion.

Comcast shares were up 2.4% in midday trading.

The company continued to lose pay-TV customers, with 273,000 net defections in the latest quarter. The drop was a modest improvement, compared with the second quarter, Chief Financial Officer Mike Cavanagh said Thursday. Just like its peers, Comcast continues to shed pay-TV customers who are opting for streaming services. Last week AT&T Inc. reported its pay-TV division lost 627,000 customers.

Overall, Comcast's cable unit -- which also includes a phone business -- posted a 2.9% increase in revenue to $15 billion.

CEO Brian Roberts said Thursday that Comcast's place in entertainment, whether in a traditional pay-TV bundle or through streaming, "remains an important consideration for new and existing customers."

The NBCUniversal division, whose businesses include cable networks, the NBC broadcast-TV unit, the Universal Pictures movie studio and the Universal Studios theme parks, saw overall revenue fall by 19% to $6.72 billion. Beyond theme parks, the largest decliner was filmed entertainment, which continued to suffer from limited capacity in movie theaters because of the pandemic, posting a 25% revenue decline to $1.28 billion. Only the broadcast unit posted higher revenue, with a gain of 8.3% to $2.41 billion.

NBCUniversal said Peacock, its new streaming service, landed 22 million sign-ups since its official launch in July. Comcast broadband and pay-TV customers receive free ad-supported subscriptions to the premium version of the service. The company has yet to disclose how many sign-ups are from its current customer base.

Peacock was also recently added to Roku Inc.'s streaming platforms after a standoff between the two companies since July. Peacock remains unavailable on Amazon.com Inc.'s Fire TV devices.

Peacock's sign-ups so far surpassed internal expectations, the company said. "We're just seeing the effects of the Roku deal kicking in, so we have lots of growth coming in amongst Roku customers," Mr. Shell said. He added the majority of Peacock's revenue comes from advertising. Comcast doesn't break down Peacock's profitability or revenue figures.

Mr. Shell said Peacock viewers have been watching Premier League soccer matches, NBC news, and deep library of content. This week, it was reported Peacock wouldn't renew one of its first original series, "Brave New World," for a second season.

NBCUniversal has been going through deep cost-cutting and restructuring. Some of it is related to the coronavirus pandemic, but most of it is tied to a realignment of its TV-content-producing operations to give priority to Peacock.

On Thursday, Mr. Roberts said the priority is investing and creating content that could be used on any of its platforms -- broadcast, cable network or Peacock -- as well as in third-party licensing deals.

As a result, several senior executives have left, and a new leadership team has been put in place over much of its programming units. Its TV and streaming businesses are led by Mark Lazarus and Cesar Conde.

Sky, the European business Comcast acquired in 2018, rebounded as sports returned in Europe. The segment reported $4.79 billion in revenue, up 5.2% from last year. Comcast has said Sky kept nearly all of its sports-package customers, who weren't charged during the months that European soccer and other sports were interrupted.

--Joe Flint contributed to this article.

Write to Lillian Rizzo at [e-mail]

(END) Dow Jones Newswires

October 29, 2020 14:28 ET (18:28 GMT)

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