Comcast (CMCSA) 2Q Earnings 2Q23

Comcast It beat analyst estimates when it reported second-quarter results on Thursday, as higher prices contributed to a continued slowdown in its broadband business.

The company also said that the number of subscribers to its Peacock streaming service nearly doubled from a year earlier to 24 million, while revenue rose 85% to $820 million. Still, losses from the streaming platform continued to weigh on NBCUniversal’s media business.

Comcast shares rose more than 5% to hit a 52-week high on Thursday.

Here’s how Comcast fared compared to estimates from analysts surveyed by Refinitiv:

• Earnings per share: Adjusted to $1.13 vs. 97 cents estimated

• It comes: $30.13 billion vs. $30.51 billion estimated

For the quarter ended June 30, Comcast reported earnings of $4.25 billion, or $1.02 per share, compared with $3.4 billion, or 76 cents per share, a year earlier. Adjusted for one-time items, Comcast posted earnings of $1.13 per share for the most recent period.

It marked Comcast’s biggest gain in two years.

Earlier this year, Comcast changed how it reported its segments. The company now bundles its Xfinity-branded broadband, cable TV and wireless services with UK-based Sky. Total revenue for the segment was $20.36 billion, which is relatively stable compared to the same period last year.

The company lost 19,000 local broadband subscribers during this period. At the end of the quarter, it had more than 32.3 million total broadband customers.

Last quarter, Comcast executives warned that adding broadband customers would remain an issue in the near term and would instead focus on average revenue per user to increase revenue for the business. Higher average rates helped offset subscriber losses in the second quarter and led to a 4.4% increase in broadband revenues.

The broadband business is stabilizing as Comcast is expected to lose more than 70,000 customers this quarter, Wells Fargo analyst Steven Cahall said in a note Thursday.

Comcast and its peers experienced slowing growth in the broadband segment after a strong quarter of earnings in the early days of the Covid pandemic. Executives cited increased competition from telecom and wireless providers, as well as the low rate of Americans moving between homes, as reasons for the sluggish growth.

Comcast Cable CEO Dave Watson said in a call Thursday that the company believes it will return to adding broadband customers over time, but would not give a timetable.

Xfinity’s mobile business continued its momentum, reaching nearly 6 million customers during the quarter.

Despite the strong quarter, Comcast President Mike Cavanagh said on Thursday’s earnings call that the company “looks very clear at the challenges we and our competitors face.” He cited cord-cutting, recent strikes by Hollywood writers and actors, and an uncertain macroeconomic environment.

Comcast continued to bleed traditional cable TV customers, losing 543,000 subscribers during the quarter. As of June 30, the company had fewer than 15 million local cable TV customers.

Cord cutting, while not a new trend, has accelerated in recent quarters as consumers shift more to streaming. In recent weeks Disney Chief Executive Bob Iger said the company is reconsidering whether its cable TV networks are still a so-called core business, and indicated that Disney would be open to selling the channels.

Comcast’s NBCUniversal also owns a portfolio of cable television channels, including USA Network and Bravo. Much of the content on Peacock comes from these networks, including live sports such as Premier League football, as well as next-day TV shows.

While Peacock’s subscribers and revenue grew, losses from the fledgling streaming platform still weighed on the media division. Adjusted losses from Peacock widened to $651 million from an adjusted loss of $467 million in the same period last year.

The company has indicated in previous months that Peacock’s losses will be about $3 billion this year.

CFO Jason Armstrong said Thursday that the company is “committed to further growing the Peacock subscriber base” as more Xfinity customers switch to paid accounts in the second half of the year and a strong programming slate, including the Aug. 3 premiere of “Super Mario Bros. Movie” and “Sunday Night Football” in the fall.

Peacock added two million customers during the quarter, driven largely by Comcast Xfinity subscribers, which began paying subscription fees in June after nearly three years of free access.

NBCUniversal is grouped under a second segment – content and experiences – which includes Comcast’s entire television and broadcasting business, international networks and Sky Sports, as well as movie studios and theme parks. The segment’s total revenue was $10.87 billion, up 4% from last year’s quarter.

Media business revenue was $6.2 billion, which is relatively stable compared to the same period last year.

The soft ad market continued to take a backseat, with native ad revenue falling nearly 5% to $2.03 billion. The local advertising decline was mainly due to lower revenue at NBCUniversal’s TV networks, which was partially offset by a jump in Peacock revenue.

NBCUniversal said it recently wrapped up its upfronts — the industry’s annual bid to advertisers for the upcoming TV season — with total cash commitments roughly the last year, their highest payments to date. The company reportedly has $7 billion in pre-commitments in 2022.

Revenue from the studio business was down about 1% year-over-year to $3.09 billion, although theater revenue was boosted by box office hits “The Super Mario Bros. Movie” and “Fast X.”

Comcast boasted that it was second in box office revenue this year. Cavanagh capped the last release of the critically acclaimed Oppenheimer, which grossed more than $82 million in its opening weekend.

NBCUniversal’s theme parks segment has continued to rally since the shutdowns and restrictions earlier in the pandemic, with revenue up 22% to $2.21 billion for the period.

A key driver was the opening of Super Nintendo World at Universal’s Hollywood park, along with growth at parks in Beijing and Japan. Its operations in Orlando, Florida, generated less revenue. Disney’s Orlando theme parks have recently seen a slowdown in traffic amid rising ticket prices.

Disclosure: Comcast is owned by NBCUniversal, the parent company of CNBC.