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Comcast beat Wall Street expectations for its fourth quarter of 2024 as Peacock continued to narrow its losses and “Wicked” helped the studios business defy gravity with an 85% increase in profit to $569 million.
But shares of the media conglomerate fell over 12% on Thursday after it shed a worse-than-expected 139,000 domestic broadband customers. Comcast Cable president and CEO Dave Watson previously warned in December that the company would lose just over 100,000 broadband subscribers, including around 10,000 from weather-related disruptions from Hurricanes Milton and Helene.
Here are the top-line results:
Net income: $4.78 billion, up 46.6% year over year. On an adjusted basis, net income grew 8.3% year over year to $3.7 billion. The figure included a $1.9 billion income tax benefit due to an internal corporate reorganization at Sky, which it expects to receive in 2025.
Earnings per share: $1.24 per share, up 54% year over year. On an adjusted basis, EPS came in at 96 cents per share, up 13.9% year over year, compared to 88 cents per share expected by analysts surveyed by Zacks Investment Research.
Revenue: $31.92 billion, up 2.1% year over year, compared to $31.63 billion expected by Zacks.
Adjusted EBITDA: $8.8 billion, up 9.9% year over year. The figure included $441 million of severance in the quarter.
Net cash from operating activities for the quarter grew 36.5% to $8 billion, while free cash flow surged 90.9% to $3.2 billion.
The latest quarterly results come as Comcast is preparing to spin off its cable network portfolio into a publicly-traded, standalone company. The move is expected to be completed by the end of the year and will be tax-free to Comcast’s shareholders.
The entity, currently dubbed SpinCo, will house USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and Golf Channel and digital assets Fandango, Rotten Tomatoes, GolfNow and SportsEngine, reaching 70 million U.S. households and generate $7 billion in annual revenue. It will be led by Mark Lazarus as CEO and Anand Kini as CFO and chief operating officer.
“As a well capitalized, independent company with a focused management team and strong portfolio of news, sports and genre based entertainment, SpinCo will be well positioned to lead in the changing cable and digital media landscape,” Comcast president Mike Cavanagh told analysts on Thursday. “When they’re ready to talk about their strategy, which will be at some point down the road, we’ll come back. But I think the idea certainly is that they’re a free-standing, strong collection of businesses with lots of cash flow generation capability for many years to come, good market positions and now great focus. So I think I’m optimistic that that creates good opportunities for our shareholders.”
He added it would be a “positive catalyst” for NBCUniversal, which will continue to be one of the largest media companies in the world with nearly $40 billion in annual revenue led by NBCUniversal Entertainment and Studios chairman Donna Langley and NBCUniversal Media Group chairman Matt Strauss.
Bravo, which is known for reality TV hits such as “The Real Housewives” and is viewed as a primary Peacock “feeder,” will stay with Comcast. Also staying are the streaming service and the NBC broadcast network, NBC Sports, Telemundo, NBCU’s local stations and the company’s film and television studios. Universal Kids is set to shutter in March. Around 98% of the viewing of NBCUniversal channels on Peacock is driven by the NBC broadcast network and Bravo, executives said.
“We’re not really running a Peacock-only strategy,” Cavanagh noted. “We’re running a broadcast-plus-streaming strategy and looking to optimize that over the years ahead.”
When asked about M&A, Cavanagh said that NBCU is not looking for any new assets, but that it remains open to strategic partnerships and bundling opportunities.
“When you look at the what remains in the the aggregate media company, it’s a strong, strong business, one of the best in the in the country and, if not, the world,” he said. “And I think it sets a very high bar for thinking about any kind of M&A in that space that would be accretive to us versus just running the businesses we have.”
Peacock Boosts Media Division Profit By 175% as Streamer’s Losses Continue to Narrow
Peacock saw revenue grow 28% to $1.3 billion, compared to $1 billion in the prior year period. But the streaming service remains unprofitable, posting a loss of $372 million for the quarter, down from a loss of $825 million in the prior year period. Total paid subscribers remained unchanged at 36 million.
Chief financial officer Jason Armstrong said Peacock would continue to make improvements towards profitability in 2025.
Overall, the media division posted a 3.5% increase in revenue to $7.2 billion and 175.2% increase in profit to $298 million. The increase in profit was due to higher revenue and consistent operating expenses, while the revenue increase was due to a 5% bump in domestic distribution revenue to $2.89 billion, primarily due to higher revenue at Peacock.
Domestic advertising grew 0.4% to $2.6 billion, primarily due to the revenue increase in Peacock and offset by lower revenue at its networks, while international networks revenue grew 4.1% to $1.09 billion due to an increase in revenue associated with the distribution of sports networks.
NBCUniversal recently won the rights to distribute up to 100 NBA regular-season games per season on NBC and Peacock for the next 11 years, starting with the 2025-2026 season. Cavanagh said the cost of those games, valued at $2.5 billion per year, will be absorbed in the second half of the year through price increases, shifting ad sales and repositioning programming that the NBA will displace.
“I would give us the full first season of NBA into second season before we normalize our business to handle the higher expense there,” Cavanagh said.
Studios Business Defies Gravity with 85% Jump in Profit
The Studios business was also a bright spot, with profits soaring 85% to $569 million and revenue growing 6.7% to $3.7 billion thanks to the successful theatrical performances of “Wicked,” “The Wild Robot,” “Kung Fu Panda 4,” and “Despicable Me 4.” Theatrical revenue grew 50% to $515 million, while content licensing revenue grew 0.3% to $2.38 billion.
Higher licensing revenue at its TV studios was offset by lower licensing revenue at its film studios, primarily due to the timing of when content was made available under licensing agreements, including the impacts of the work stoppages in the prior year period.
“We are excited about the 2025 slate, which includes ‘How to Train Your Dragon,’ ‘Jurassic World Rebirth’ and ‘Wicked: For Good,’ just to name a few,” Armstrong said. “While we expect another strong theatrical and PVOD run, studio EBITDA growth will be impacted in 2025 by higher marketing expenses tied to a larger film slate and lower carryover from prior years, given the writers and actors strikes in 2023.”
Comcast Continues to Bleed Broadband, Pay TV Subscribers
Comcast’s Connectivity & Platforms unit was hit hard in the fourth quarter, with the segment shedding 139,000 domestic broadband customers for a total of 31.84 million and 311,000 video customers for a total of 12.5 million. But wireless was a bright spot, with 307,000 additions during the quarter for a total of 7.8 million.
Total revenue for the segment fell 0.3% to $20.46 billion, while profit grew 3.5% to $7.8 billion. Residential connectivity revenue grew 5.2% to $9.07 billion, including domestic broadband revenue growth of 2% to $6.5 billion, domestic wireless revenue growth of 16.6% to $1.2 billion and international connectivity revenue of 9.8% to 1.35 billion.
Video revenue declined 5.8% to $6.5 billion driven by continued cord-cutting, partially offset by an overall increase in average rates. Advertising revenue grew 4.4% to $1.16 billion, primarily due to higher domestic political advertising that was partially offset by lower domestic nonpolitical and international advertising. Excluding political advertising, advertising revenue fell abut 6%.
“Looking ahead, we intend to lean into wireless, which means additional investment there,” Armstrong said. “But the overall framework for growth over the long term remains the same, a mixed shift driven by continued strong growth in our connectivity businesses, which creates opportunity for further margin expansion.”
Comcast said a top priority would also be upgrading its broadband network and WiFi network capabilities to boost speeds for its customers, which would include incorporating artificial intelligence. Additionally, it plans to introduce new bundle packaging and pricing to provide customers with more flexibility and less friction, such as its recently announced Sports & News TV package.
Theme Parks Drag With Flat Revenue Growth, 3.9% Decline in Profit
The theme parks business was also a drag on Comcast’s earnings, with profit falling 3.9% to 838 million and flat revenue growth of 0.1% to $2.37 billion.
The domestic theme parks saw lower revenue, driven driven by lower guest attendance, offset by higher revenue at international theme parks. The segment’s results included around $35 million of pre-opening costs in the quarter for the Epic Universe theme park in Orlando, which is scheduled to open on May 22.
Looking ahead, executives said the division’s results would be impacted by over $100 million in opening costs for Epic Universe, with the vast majority incurred in the first quarter of 2025, incremental domestic marketing spend and the impact of the Los Angeles wildfires.
