Comcast shares climbed over 7% in pre-market trading on Thursday after the media giant beat Wall Street’s third-quarter expectations, boosted by the Paris Olympics, and said it would consider spinning off its struggling cable network portfolio into a standalone company.
Peacock posted a loss of $436 million during the quarter, a 22% improvement over a $565 million loss in the prior-year period. The streamer’s revenue grew 82% $1.5 billion, and it added 3 million paid subscribers for a total of 36 million, up 29%.
The Olympic games brought in record high revenue of $1.9 billion, with average daily viewership of 31 million across the company’s linear networks and Peacock, an 82% increase compared to the 2021 Summer Olympics.
“We achieved this result by leaning in with the full symphony of Comcast and NBCUniversal playing together and a big bet on new ideas and innovation that paid off,” Comcast president Mike Cavanagh told analysts on Thursday. “We are all very grateful to our NBC Sports team and look forward to them bringing the lessons learned and momentum to our entire sports portfolio.”
Here are the top-line results:
Net income: $3.63 billion, down 10.3% year over year. On an adjusted basis, net income fell 3.3% year over year to $4.3 billion.
Earnings per share: 94 cents, down 4.2% year over year. On an adjusted basis, EPS came in at $1.12 per share, up 3.3%, compared to $1.06 per share expected by analysts surveyed by Zacks Investment Research.
Revenue: $32.07 billion, up 6.5%, compared to $31.8 billion expected by Zacks.
Adjusted EBITDA: $9.74 billion, down 2.3% year over year
The Studios division was also a bright spot, with a 12.3% increase in revenue and 9% increase in adjusted EBITDA, driven by the strong performance of “Twisters” and “Despicable Me 4” at the box office.
But the quarter’s overall results were dragged down by weakness in theme parks, with the segment posting a 5.3% decrease in revenue and 13.8% decrease in adjusted EBITDA, as well as continued pay TV and broadband subscriber declines.
The surprise news of the day, however, was Cavanagh’s announcement that Comcast was considering a spin-off of its cable assets, and was open to streaming partnerships to help Peacock grow.
With linear TV business continuing to erode, the executive talked about “playing some offense” with a possible separation of the cable network from the larger company. “When you combine the balance sheet strength that we have, the assets we have, and the management team we have, there may be some smart things to do and we want to study that,” Cavanagh added.
Net cash from operating activities fell 13.9% to $7.02 billion, while free cash flow fell 15.5% to $3.4 billion. Comcast returned $3.2 billion to shareholders during the quarter, including $2 billion in share repurchases and $1.2 billion in dividend payments.
Olympics boost NBCUniversal, Peacock
The Content & Experiences segment saw revenue grow 19.3% to $12.6 billion. Profit declines in the theme parks and media segments pushed down adjusted EBITDA by 8.7% to $1.8 billion, which was partially offset by growth in the studios division.
Overall media revenue shot up 36.5% to $8.23 billion due to higher domestic advertising and domestic distribution revenue. Excluding the impact of the Olympics, media revenue increased 4.9% to $6.34 billion.
The Paris Olympics and additional Peacock sales also fueled domestic advertising revenue growth of 74.9% to $3.35 billion, which was partially offset by lower revenue at the company’s networks. Domestic distribution revenue climbed 26.3% to $3.27 billion, which primarily reflected the broadcast of the Paris Olympics and higher revenue at Peacock.
International networks revenue rose 5% to $1.07 billion due to the positive impact of foreign currency and an increase in revenue associated with the distribution of sports networks. Other revenue grew 7.2% to $542 million, primarily due to an increase in revenue from content licensing.
Adjusted EBITDA for the media segment fell 10% to $650 million, due to higher operating expenses from increased sports programming costs associated with the Olympics, higher programming costs at Peacock and an increase in other sports programming costs for domestic television networks.
“Twisters” and “Despicable Me 4” boost Studios, but Theme Parks are a drag
The Studios segment saw revenue grow 12.3% to $2.83 billion, primarily due to higher content licensing revenue and theatrical revenue. The higher revenues allowed Adjusted EBITDA for the segment to grew 9% to $468 million, which offset higher operating expenses from programming and production associated with content licensing sales, including the impact of Hollywood strikes in the prior-year period.
Content licensing revenue increased 10.3% to $1.87 billion. Theatrical revenue increased 21.3% to $611 million due to the successful performance of recent releases, including “Despicable Me 4” and “Twisters.”
Revenue in the Theme Parks segment slipped 5.3% to $2.29 billion, primarily due to lower revenue and guest attendance at its domestic theme parks, while adjusted EBITDA declined 13.8% to $847 million, reflecting lower revenue and consistent operating expenses.
“Our view is there was both a pull forward of demand that we clearly saw in 2022 and 2023, which were record years for the theme parks and beyond our expectations, as well as the new attraction pipeline, which is light this year, but we’re building towards a substantial pipeline next year,” chief financial officer Jason Armstrong said. “We think these factors will likely be in place until the second quarter of next year, which is both when we start to lap the pressure we saw this year and the launch of Epic Universe.”
Company executives touted the opening of Comcast’s Epic Universe theme park in May 2025, noting there will be associated opening costs of $150 million in the fourth quarter and first quarter of 2025, with the majority of the cost expect in the latter.
“Once Epic opens, Universal Orlando will be transformed into a weeks long vacation, offering four theme parks, a CityWalk, dining, retail and entertainment district, and 11 hotels,” Cavanagh said. “Epic will build on everything we’ve excelled at in the present and in the past and make it even better by infusing iconic storytelling with cutting edge technology in five fully themed worlds, each one telling a fantastic story based on world renowned movies and literature.”
Comcast sheds pay TV, broadband subscribers, but wireless a bright spot
Comcast continued to bleed pay TV subscribers, shedding 365,000 during the quarter for a total of 12.8 million. It lost 87,000 domestic broadband subscribers for a total of 31.98 million.
The company did add 319,000 domestic wireless lines for a total of 7.52 million. Total customers relationships fell by 29,000 to 51.7 million, primarily reflecting a decrease domestically, which was partially offset by an increase in international relationships.
Total revenue for the Connectivity & Platforms segment fell 0.4% to $20.29 billion, with a 1% decrease in residential revenues to $17.9 billion and 4.5% increase in business services revenues to $2.42 billion. Adjusted EBITDA grew 0.7% to $8.3 billion, with a 0.3% increase in residential to $6.9 billion and 4.2% increase in business services to $1.39 billion.
Total residential connectivity revenue grew 5.7% to $8.9 billion, including a 2.7% increase in domestic broadband revenue to $6.54 billion due to higher average rates, a 19.2% jump in domestic wireless revenue to $1.09 billion due to the increase in customer lines and devices sales, and a 11.4% boost in international connectivity revenue to $1.23 billion from increased broadband revenue.
Video revenue fell 6.2% to $6.7 billion due to a decline in the number of video customers, partially offset by an overall increase in average rates, while total video advertising revenue increased 1.6% to $987 million because of higher domestic political advertising.
Comcast Cable CEO Dave Watson noted that the subscriber and financial impacts of Hurricanes Milton and Helene on its cable systems could be significantly less than the impact of Hurricane Ian in 2022.
“We don’t have an exact number to share at this moment, but there’ll be some impact tied to the two hurricanes also in Q4 while the return of seasonals to the Southeast usually provides a good tailwind, not like back to school, but still a nice impact, we’ll have to see what the potential impact we see with this activity due to the hurricane,” Watson added.
He also said that the company expects churn in the Connectivity & Platforms segment to remain low as it focuses on retention, channel management and leverages offers and product packaging such as Now TV, Now Latino and Streamsaver.
Armstrong added that the segment would take cost reduction actions in the fourth quarter of 2024 of “equal magnitude” to the company’s previous fourth quarters.
