By Shalini Ramachandran
Comcast Corp. is scheduled to report second-quarter earnings on
Thursday. Here's what you should know.
EARNINGS FORECAST: Comcast is expected to report per-share
earnings of 84 cents, according to analysts polled by Thomson
Reuters, compared with 76 cents a year earlier.
REVENUE FORECAST: Analysts, on average, expect Comcast to report
revenue of $18.14 billion, compared with $16.84 billion in the
year-ago quarter.
WHAT TO WATCH:
STREAMING: Comcast jumped on the "skinny bundle" bandwagon when
it recently announced a new $15-a-month streaming TV service for
its Internet customers. The Stream service will include broadcast
networks and HBO and will come with a cloud-based digital video
recorder. Investors will be watching for commentary on how
important slimmed-down pay TV packages are to the future of
Comcast's video business--and how their proliferation may weigh on
revenue and profit growth.
Another wrinkle: Comcast hasn't yet signed on to distribute
HBO's $15-a-month streaming service to its broadband customers.
Comcast management may be asked to explain whether they plan to
hook up with HBO or whether they believe Stream offers a better
value--and is more protective of their video business--than
offering a Web-based HBO a la carte to their customers.
CORD-CUTTING WATERSHED?: Investors will also be watching to see
how pay TV providers weather a seasonally weak second quarter. Last
quarter marked the first time the industry as a whole lost
customers in a first quarter, according to MoffettNathanson, a
typically a stronger period for pay TV providers. Cord-cutting
overall has picked up, even as U.S. Census Bureau data shows that
new household formation spiked in the last six months, according to
MoffettNathanson analyst Craig Moffett. The second quarter "could
be a watershed" moment in the cord-cutting story, Mr. Moffett said,
since it'll be the first period where new streaming services like
Dish Network Corp.'s Sling TV and Sony Corp.'s Vue will fully
factor into the mix.
BOX-OFFICE STRENGTH: NBCUniversal's Universal Studios has been
on a tear, putting up big box-office numbers for such films as
"Jurassic World," "Fast and Furious 7" and "Pitch Perfect 2." That
could help offset potential weakness in the entertainment arm's
cable networks, which have faced pressure in part because of steep
ratings declines.
M&A: In April, Comcast dropped its bid for Time Warner Cable
due to stiff regulatory opposition in Washington. As a result,
analysts and industry executives largely believe that Comcast won't
attempt big, transformative deals--like buying another cable
company or wireless carrier--until a new presidential
administration is installed after the elections. But perhaps other,
smaller deals could be on the table: Comcast's former CFO, Mike
Angelakis, is set to head up a new $4.1 billion investment company
for the cable giant. The firm is likely to scout for domestic and
international acquisitions and growth-oriented companies in the
billions-of-dollars range, the Wall Street Journal has reported.
Areas like digital media, wireless, international content companies
or ad technology firms could be of interest.
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