Comcast reported second-quarter revenue and earnings, where the cable provider didn’t add broadband customers in a quarter for the first time ever. Overall Comcast’s second-quarter net income was $3.396 billion, or 76 cents a share, down 9.2% from $3.738 billion a year ago. Revenue overall rose 5.1% to $30 billion, whereas video revenue fell 2.4% to $5.423 billion as the company lost 1 million video customers. Comcast added 252,000 net broadband customers during the quarter.
According to FactSet, Comcast’s high-speed internet customers in the quarter were flat, trailing the 84,000 average analyst estimate. The company’s shares fell more than 9% Thursday morning. Comcast is seeing growing competition for high-speed broadband, its most lucrative product. For over a decade, the cable industry has dominated the home broadband market, but wireless companies such as T-Mobile are now competing by offering 5G home internet products. T-Mobile added 560,000 broadband users in the second quarter, well above its first-quarter total of 338,000.
“Mobile substitution will eventually stabilize,” Comcast Chief Executive Officer Brian Roberts said during the company’s earnings conference call. Still, Comcast said broadband losses continued early in the third quarter, noting a loss of about 30,000 broadband customers in July. Comcast Chief Financial Officer Mike Cavanagh said that the back-to-school movement might lead to renewed subscriber addition before the end of the quarter. In a statement, Roberts called the broadband dip temporary as macroeconomic conditions such as higher inflation limit the number of new connects for the company. Broadband revenue rose 6.8% yearly to $6.1 billion in the quarter on increased rates and a higher number of residential customers than a year earlier. “We achieved our highest adjusted EBITDA margin on record even amid a unique and evolving macroeconomic environment that is temporarily putting pressure on the volume of our new customer connects,” Roberts said.
FEWER VIDEO CUSTOMERS
Comcast lost 521,000 video customers in the quarter and 1 million video subscribers in the first six months of 2022. Consumers are shedding traditional pay-TV subscriptions at accelerated rates in favor of streaming options, such as Netflix, Disney+, HBO Max, and NBCUniversal’s Peacock. Voice customers fell by 286,000 in the quarter, though wireless net additions jumped by 317,000. Wireless revenue rose nearly 30% yearly to $722 million, and business services rose 10% to $2.4 billion.
NBCUniversal profits grew in the second quarter despite considerable losses at direct-to-consumer streaming service Peacock. The platform lost $467 million in the quarter, more than the $363 million it last a year ago. Peacock generated revenues of $444 million, up from $122 million a year ago. After a solid first quarter, Peacock’s subscribers remained at 13 million after the second quarter, parent company Comcast said in its earnings announcement Thursday.
The losses left earnings at NBCU’s media business down 2.9% at $1.337 billion. Revenue rose 3.6% to $6.3 billion. Distribution revenues were up 8.4%, while advertising revenues were down 1.3%. Because of a strong showing at its theme parks, NBCUniversal’s adjusted earnings before interest, taxes, depreciation, and amortization rose 19.5% to $1.9 billion, including losses from Peacock. Revenues were up 18.7% to $9.445 billion. "Our financial results in the second quarter were powerful across the board, with Cable, NBCUniversal, and Sky each delivering solid growth,” Roberts said.“At NBCUniversal, terrific results at theme parks fueled our growth in the quarter. We expect our recent premieres and planned slate of content and live events from our media and studios businesses, including Jurassic World: Dominion, Minions: The Rise of Gru, Nope, Sunday Night Football, and The World Cup, to make significant contributions later this year, including to our subscriber growth at Peacock. Looking ahead, our company is in an enviable strategic and financial position, with substantial cash flow generation and a strong foundation for innovation," he added.
Studios revenue increased more than 33% to $3 billion, driven by “Jurassic World: Dominion,” which has topped $900 million in global box-office sales. The Universal theme park business continued to recover from last year’s Covid pandemic slowdown. Revenue jumped about 65% to $1.8 billion. Peacock paid subscribers stayed flat at 13 million after a gain of 4 million last quarter. Comcast said it expects “Jurassic World: Dominion,” along with two films released in theaters in the third quarter — “Minions: The Rise of Gru” and Jordan Peele’s “Nope” — to help boost Peacock subscribers when they come to the streaming service after their box-office windows expire. “Sunday Night Football” and the World Cup, which starts Nov. 21, should also help add to Peacock’s subscriber totals later this year, Comcast said. Comcast reiterated Peacock remains on pace to lose $2.5 billion this year as it spends on new content.
Here’s how Comcast’s divisions did for the quarter compared with a year earlier:
- Cable Communications contributed $16.6 billion in revenue, up 3.7% year over year
- Media brought in $5.3 billion in revenue, up 3.6%
- Studios contributed $3 billion in revenue, up 33.3%
- Theme parks brought in $1.8 billion in revenue, up 64.8%
- Sky contributed $4.5 billion in revenue, down 13.8%