Comcast Tops Q3 Estimates Despite Tough Comparisons With Tokyo Olympics, Cord-Cutting And Volatility In Sky Markets

Dade Hayes
·3 min read

Comcast narrowly beat Wall Street estimates in the third quarter despite volatility in the UK and Europe, tough comparisons with the year-ago Tokyo Olympics quarter and ongoing cord-cutting.

Earnings per share came in at 96 cents, six cents better than analysts’ consensus estimate and 10% ahead of the same quarter in 2021. Total revenue also cleared the bar at $29.8 billion, though it was down 1.5% from the year-ago period.

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At NBCUniversal, adjusted EBITDA rose almost 25% to $1.7 billion despite losses at streaming service Peacock. Revenue slid 4% to $9.6 billion. Comparisons were tough across the board with the year-ago quarter, which included $1.8 billion of incremental revenue from the Tokyo Olympics. When the Olympics are taken out, media division revenue gained 4%, Comcast said.

The highlight within NBCU in Thursday’s report was the studios division, where revenue shot up 31% to $3.2 billion on rising theatrical and licensing fortunes. The successful releases of Jurassic World: Dominion and Minions: The Rise of Gru came during the quarter. Production activity “returned to normal” during the quarter, the company declared.

Sky encountered turbulence, with revenue plunging 15% to $3.5 billion, though it was flat when foreign currency volatility is factored out. Comcast said it recorded noncash impairment charges of $8.6 billion related to an increased discount rate and what the earnings release called “reduced estimated future cash flows as a result of macroeconomic conditions in Sky’s territories.”

Sky’s adjusted EBITDA tumbled 28% from a year ago to $701 million. Even with currency volatility removed, the drop was 15.5% due primarily to higher sports programming costs. Comcast blamed the timing of sporting events, including a shift of certain football matches to the third quarter in advance of the 2022 FIFA World Cup, which will be played in November and December.

The Cable Communications division shed 540,000 residential video customers in the quarter to land at a shade less than 16 million overall. Revenue of $16.5 billion inched up almost 3% from a year ago, while adjusted EBITDA ticked up 5% to $7.45 billion.

In an interview with CNBC earlier this month, NBCUniversal CEO Jeff Shell said Peacock had reached 15 million paying subscribers, a number affirmed in the official earnings release. Counting bundled and free viewers, the service now has about 30 million monthly active users, which is the low end of projections the company offered investors in 2020 before launching the service. Peacock has gotten off to a slower start than many of its streaming rivals, partly due to Covid launch conditions and an initial strategic emphasis on its free, ad-supported tier. NBCU and Comcast have been trying to goose its growth in a number of ways, from price discounts to pay-1 movie windows to re-routing titles there from Hulu.

Peacock losses widened to $614 million in the period from $520 million a year ago.

“Despite the challenges that may lie ahead, we are in an enviable strategic and financial position, and our future remains bright,” Comcast CEO Brian Roberts said in the earnings release.

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