Comcast’s earnings beat forecasts even as it loses more broadband customers

Comcast On Thursday, the company beat expectations for first-quarter earnings as broadband increased revenue, even as subscriber growth slowed for the company and its peers.

Here’s how Comcast performed compared to analysts’ estimates surveyed by LSEG:

• Earnings per share: Adjusted to $1.04, 99 cents expected
• Income: US$30.06 billion, against expectations of US$29.81 billion

Net profit rose 0.6% to $3.86 billion, or 97 cents per share, in the quarter ended March 31, compared with $3.83 billion, or 91 cents per share, a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 0.6% to about $9.4 billion.

The company’s revenue rose 1.2% to $30.06 billion from the same period last year. Although Comcast lost 65,000 subscribers in the quarter, revenue from its domestic broadband subscriber segment grew due to higher growth rates.

Comcast shares fell nearly 6% on Thursday.

The cable broadband company’s growing subscriber base has weighed on share prices in recent quarters, with disappointing performance.

High interest rates have slowed home sales, leading to a decline in the number of new home Internet connections. Cable TV providers have faced intense competition for home broadband from wireless companies, such as move the t And Verizon.

Comcast President Mike Cavanagh said in an earnings call Thursday that the market is “very competitive,” especially for “cost-conscious customers.”

Earlier this month, Comcast said it would release Now, a prepaid, monthly, low-cost Internet and phone plan. This program is designed to provide a fixed wireless option at a low cost.

The program complements Comcast’s longstanding Internet option for low-income customers called “Internet Essentials.”

Company executives don’t expect improvements anytime soon, especially since the federal government launched the Affordable Connectivity Program (ACP), which gives qualified low-income families a $30 discount on broadband service last April.

Comcast’s wireless subscriber base grew 21% in the quarter to 6.9 million lines. The company lost 487,000 cable subscribers in the quarter as customers opted for streaming services.

On July 29, 2023, a billboard for the film “Oppenheimer” was displayed in New York’s Times Square.

Adam Jeffrey | CNBC

The company’s theme park adjusted EBITDA decreased 3.9% to $632 million in the quarter due to higher operating expenses such as higher marketing and promotional costs, as well as the negative impact of foreign exchange.

On Thursday, Kavanagh noted that Orlando theme park visitors “felt some pressure” in the latest quarter as the company built new attractions. He added that the company is confident in the long-term growth and future opportunities of its parks.

Increased competition, particularly from cruise ships, is also putting pressure on theme parks, Comcast Chief Financial Officer Jason Armstrong said in a conference call Thursday.

Similarly, revenues fell at media businesses and studios, including NBCUniversal. All three businesses now belong to the same category, with total revenue up 1.1% to $10.37 billion

Still, Comcast executives are touting Universal’s film lineup, from recent Academy Award winners “Oppenheimer” and “The Holdovers” to the upcoming and highly anticipated film based on the hit Broadway movie “Wicked.”

Executives highlighted “Peacock” as a bright spot and driver for NBCUniversal, which is also benefiting from its film slate.

When “Oppenheimer” first launched on the streaming service earlier this year, it became the show’s exclusive home, a win for the platform. Comcast says it’s the most-watched movie in “Peacock” history.

The service added 3 million paid subscribers in the quarter, bringing its total subscriber base to 34 million. Executives said in a conference call Thursday that Peacock’s exclusive NFL Wild Card game helped add and retain more customers than expected.

“We’re 3.5 years in and we’ve really seen traction in our approach,” Kavanagh said Thursday, noting the benefits of combining sports and entertainment.

While Peacock is known for its extensive live sports coverage, including the NFL and Premier League, Kavanagh says subscribers spend 90% of their time on non-sports programming, such as the Peacock original “Ted” and its Universal series. He added that the company expects Peacock to have “real value potential” over time.

The streamer’s revenue rose 54% to $1.1 billion compared to the same period last year. Although domestic advertising was flat in the quarter, the company’s domestic distribution revenue increased, driven by growth in Peacock. Media companies face a longer-than-expected softer advertising market.

Peacock loss offsets unit mass and higher revenue. The company’s Peacock-related adjusted EBITDA loss for the quarter was $639 million. However, the situation improved compared to an adjusted EBITDA loss of $704 million in the same period last year.

Peacock losses are said to peak in 2023, and executives expect losses to narrow in the coming quarters. This summer’s Paris Olympics should also drive growth for streaming services

With the Games increasing airtime on its broadcast network NBC, the company is on track to generate the most Olympic ad revenue in its history, excluding Peacock.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.