Comcast (CMCSA) Q1 2023 outcomes

Komcast topped analysts’ expectations with its first-quarter earnings report on Thursday, despite the cable and media giant’s slowing growth in consumer broadband and mounting Peacock losses.

The company’s shares are up more than 7%.

Here’s how Comcast performed versus estimates from analysts polled by Refinitiv:

  • Earnings per share: 92 cents adjusted vs. 82 cents expected
  • Revenue: $29.69 billion versus $29.3 billion expected

For the quarter ended March 31, Comcast reported earnings of $3.83 billion, or 91 cents a share, compared to $3.55 billion, or 78 cents a share, a year ago. Adjusted for one-time items, Comcast reported earnings per share of 92 cents for the most recent period.

Revenue fell 4% to $29.69 billion from $31.01 billion in the year-ago period, with the company noting that it broadcast both last year’s Super Bowl and Beijing Olympics in the first quarter .

The Philadelphia-based company said its adjusted earnings before interest, taxes, depreciation and amortization rose 3% in the first quarter to $9.42 billion in the first quarter.

Comcast said it returned $3.2 billion to shareholders in the quarter through a mix of $1.2 billion in dividend payments and $2 billion in share repurchases.

Comcast had 21,000 fewer residential broadband subscribers year-over-year at the end of the three-month period, adding just 3,000 during the quarter. She received a slight boost from her business customers. Company executives warned earlier this year that Comcast was likely to lose broadband subscribers in the first quarter.

Still, it was a sign that Comcast, like its peers, continues to face slowing growth in its broadband business. Executives have said that while the rate of customer loss is very low, growth has stalled – particularly since the early days of the Covid pandemic – as they face increased competition from telecom and mobile operators.

Comcast executives said on Thursday’s earnings call that the company believes adding subscribers will likely be challenging in the near term but will focus on average revenue per user to grow revenue for the segment.

Xfinity’s wireless business grew to nearly 5.67 million customers during the quarter, a sign that its wireless service — which is provided in conjunction with a user agreement — is growing Verizon‘s network – remains a ray of hope.

Cable TV subscribers continued their exodus from the traditional bundle, with Comcast losing 614,000 subscribers during the quarter.

Last month, Comcast announced that it was changing the reporting of its segments, and is now grouping its Xfinity-branded broadband, cable TV and wireless services with its UK-based Sky, which sells pay-TV services and entertainment TV channels Sky brand encompasses around the “Connectivity and Platforms”. Total segment revenue was approximately $20.15 billion, a slight decrease from the previous quarter due to the impact of foreign currencies.

The second segment, Content and Experiences, includes all of NBCUniversal’s television and streaming businesses, its international networks and Sky Sports channels, as well as its film studios and theme parks. Total segment revenue fell nearly 10% to $10.26 billion in the quarter.

Media business revenue declined in the first quarter, falling about 20% to $6.15 billion due to last year’s comparison when NBC aired the Super Bowl and rights to the Beijing Olympics for his TV stations and Peacock had . However, Comcast said that excluding the $1.5 billion incremental revenue from those two major sporting events, media revenues were still down about 2%.

The tightening advertising market showed up on Comcast’s balance sheet this quarter, as did its peers Paramount Global and Warner Bros. Discovery. Excluding the Olympics and Super Bowl — two events that generate a lot of advertising revenue — domestic advertising fell about 6% in the quarter due to lower TV station revenue and a decline in TV ratings.

Revenue from domestic television distribution increased, except for the Olympics, which Comcast said was primarily due to higher revenue at Peacock, which had more paying subscribers.

According to Comcast, Peacock subscribers grew more than 60% year over year to 22 million and revenue rose 45% to $685 million. Peacock had losses of $704 million compared to losses of $456 million in the same period last year.

Last quarter, the company noted that Peacock’s losses would be about $3 billion this year. Streaming service costs continued to weigh on Media segment earnings. Executives said Thursday they were “encouraged” by Peacock’s results and will see steady improvement after expected peak losses this year. Comcast President Mike Cavanagh said the company had confidence that Peacock would “break even and grow from there.”

NBCUniversal’s film segment was boosted during the quarter by the animated “Shrek” spinoff Puss in Boots and the horror film “M3GAN,” with revenue increasing nearly 2% to $2.96 billion rose.

Both Comcast CEO Brian Roberts and Cavanagh lauded NBCUniversal’s animated film business Thursday with the success of “The Super Mario Bros. Movie,” which released earlier this month. This week it surpassed $900 million at the global box office, including $444 million domestically.

“We’ve had tremendous success creating franchises,” Roberts said on Thursday’s conference call, citing the Despicable Me and Shrek franchises. “These are the results of the strategic decisions we made years ago to become leaders in animation and the belief to invest in the business during the pandemic.”

Cavanagh noted that NBCUniversal’s Jurassic Park, Minions, and Halloween franchises helped boost the box office over the past year.

“We’re really proud of our animation business,” Cavanagh said Thursday.

NBCUniversal’s upcoming film listing includes Fast X, the next installment in the popular Fast and Furious franchise, as well as Christopher Nolan’s next epic Oppenheimer, about the scientist who led the development of the atomic bomb during World War II. It will appear in the July.

The company’s theme park segment continued to grow, especially since parks closed during the height of the pandemic, with revenue up 25% to $1.95 billion. Revenue was boosted by international parks that were still strained by pandemic restrictions last year. The opening of Super Nintendo World also contributed to the increase in sales.

Earlier this week, NBCUniversal faced the removal of CEO Jeff Shell over a sexual harassment and discrimination complaint filed by an employee. Roberts addressed the matter at the start of Thursday’s conference call, saying it was “obviously a difficult moment” for the company, but stressed his confidence in NBCUniversal’s executive team, who will now report to Cavanagh.

“Imagine that I’m here for a while,” Cavanagh said in reference to his future as head of the NBCUniversal team. He noted during the call that he has been close to the company since joining Comcast nearly eight years ago and has been “deeply involved for a long time.”

Investors also shouldn’t expect that NBCUniversal will see a “revision strategy” based on Shell’s departure alone, and would instead react “if the environment changes.”

Disclosure: Comcast owns NBCUniversal, CNBC’s parent company.

Correction: Comcast’s total media revenues were down more than 20%. A previous version incorrectly stated this number.

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