By Shalini Ramachandran
Comcast Corp. reported better-than-expected financial results in
the third quarter, as the cable company added video customers and
the Rio Olympics powered strong growth at its NBCUniversal
unit.
NBCUniversal's growth may be tracked particularly closely given
AT&T Inc.'s recent agreement to buy Time Warner for $85.4
billion -- a deal modeled largely on Comcast's purchase of
NBCUniversal, which married content and distribution.
On an earnings call with analysts, Comcast Chief Executive Brian
Roberts declined to comment on the AT&T deal, but said that he
believes "we have a fabulous company" and NBCUniversal has been a
great investment for Comcast.
Revenue grew 28% to $9.2 billion at NBCUniversal in the third
quarter, thanks to the Rio Olympics. Excluding the boost from the
Games, NBCU's revenue increased 5.7%.
On the cable side, Comcast added 32,000 video customers,
compared with a loss of 48,000 in the prior-year quarter,
lengthening a strong streak for the cable industry in a weak
overall pay-TV market.
Comcast's results add to the cable industry's comeback after
years of losing video subscribers to satellite and phone companies.
Cable companies are benefiting from pouring more investment into
their cable TV products and bundling that alongside fast broadband,
as well as offering cheaper, slimmed-down bundles of programming
for more cost-conscious consumers.
Total quarterly profit rose to $2.2 billion, or 92 cents a
share, up from $2 billion, or 80 cents a share, a year ago. Revenue
grew 14% to $21.3 billion, though it was only up 5.5% when
excluding the impact of the 2016 Rio Olympics.
Revenue and profit slightly exceeded estimates from analysts,
who were projecting earnings of 91 cents a share on $21.2 billion
in revenue, according to Thomson Reuters.
Comcast may soon have a new media-and-broadband rival. On
Tuesday, AT&T said its new DirecTV Now nationwide streaming
service will be priced at $35 a month and stream more than 100
channels -- an offer that undercuts similar packages from
traditional operators like Comcast and new entrants like Sony
Corp.'s PlayStation Vue.
NBCUniversal CEO Steve Burke said he doesn't think new online
television services are going to be "material" to television growth
"in the next year or two." He projected that new entrants will
likely only sign up a fraction of the 20 million homes that don't
subscribe to pay-TV today.
"I think we all have a healthy degree of skepticism that these
new [over-the-top] entrants are going to create millions and
millions and millions of subscribers any time soon," Mr. Burke
said. "Most people find tremendous value...in their cable and
satellite subscriptions and are not looking to change."
Comcast, so far, has said it is focused on its own cable
footprint and isn't interested in creating a nationwide streaming
service. That strategy has paid off for the company, as it has
managed to grow video customers despite cord-cutting. The cable
company has, in part, credited its next-generation X1
internet-connected set-top box and guide, which it says increases
customers' time spent watching TV and makes them more likely to
stick with Comcast. The company said nearly 45% of its customers
now have X1 boxes.
The cable giant's broadband and business services divisions
posted strong sales growth in the third quarter, lifting overall
revenue at the cable business -- which accounts for the bulk of
Comcast's top line -- by 6.9% to $12.6 billion.
The cable giant added 330,000 broadband customers in the
quarter, compared with 320,000 a year earlier. Voice customer
additions slowed to 2,000 from 17,000 a year earlier, as the
company focused on adding "double-play" cable TV and internet
customers in the quarter.
Revenue grew 22% to $2.9 billion at NBCUniversal's cable
networks, though excluding the Olympics it would have grown 4.1%.
Revenue at the broadcast-TV segment, which includes the flagship
NBC network, grew 56.6% to $3 billion. Excluding the impact of the
Olympics, it would have declined 3.6%, largely because of a
content-licensing deal in the year-ago quarter.
Comcast's cable networks' advertising revenue shot up almost 16%
in the third quarter. But, excluding the Olympics, advertising
growth was flat because higher ad rates were offset by viewership
declines.
Shares of Comcast fell 2.9% to $62.65 in midafternoon
trading.
A major point of debate in the media industry of late has been
falling ratings for National Football League games. On the call,
Mr. Burke said only about 1% to 2% of people are watching NFL and
Olympics programming online, which doesn't explain away the
viewership falloffs.
"It's very difficult to tell precisely what is happening on any
sporting property...but if you step back, the Olympics and the NFL
are the two highest-rated programs of the year in all of
television," Mr. Burke said. He added that both continue to be
"very profitable relationships" for Comcast.
Coming off a blockbuster year, filmed entertainment continued to
see a drop in revenues and operating cash flow, despite the success
of the animated movie "The Secret Life of Pets." Revenue at the
theme parks segment, however, grew 61% to $1.4 billion, thanks to
the September 2015 purchase of control of Universal Studios Japan
and continued strength at the Harry Potter attractions.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
October 26, 2016 14:30 ET (18:30 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Comcast (NASDAQ:CMCSA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Comcast (NASDAQ:CMCSA)
Historical Stock Chart
From Apr 2023 to Apr 2024