Comcast Lifts Cash Flow as Peacock Turns Profitable
Domestic broadband losses widened to 167,000 customers even as wireless additions reached a record.
Comcast Corp. (CMCSA), the cable and media company, posted its first quarterly profit at Peacock as stronger entertainment results offset further deterioration in its core connectivity business.
The quarter marked a sharper split between Comcast’s businesses. Content & Experiences revenue rose 22.9%, while Connectivity & Platforms revenue declined 3.0% as broadband customer losses accelerated and average rates fell.
Revenue fell 1.2% from a year earlier to $29.94 billion, reversing a 5.3% increase in the prior quarter. Adjusted earnings declined 16.7% to $1.04 a share, though the contraction narrowed from 27.5% in the first quarter. Adjusted EBITDA fell 13.4% to $8.90 billion, also a smaller decline than the prior quarter.
Peacock produced $189 million of adjusted EBITDA, compared with a $101 million loss a year earlier, as revenue climbed to $1.9 billion and paid subscribers increased by two million to 48 million. Media revenue rose 25.3%, helped by $440 million of incremental FIFA World Cup revenue, but higher NBA and World Cup programming costs limited EBITDA growth to 3.7%.
Studios provided another offset, with revenue rising 25.0% to $3.04 billion and EBITDA increasing to $202 million from $61 million. Theatrical revenue more than tripled to $972 million on releases including “The Super Mario Galaxy Movie” and “Obsession.” Theme Parks moved in the opposite direction, as EBITDA fell 5.1% after increasing 33% in the first quarter.
Within connectivity, residential revenue declined 4.0% and EBITDA fell 8.0%, pushing the margin down 160 basis points to 37.7%. Wireless-service revenue rose 14.2%, and record additions of 448,000 lines lifted the total to 10.2 million, partially cushioning the broadband decline. Business Services also improved its profitability, with EBITDA growth accelerating to 5.0% and its margin expanding to 56.7%.
Free cash flow rose 2.3% from a year earlier to $4.60 billion, reversing the first quarter’s 28.0% decline, even as capital expenditures increased 8.3% to $2.9 billion. Comcast returned $2.1 billion to shareholders, including $900 million of repurchases, before pausing buybacks on June 29 while pursuing its business separation.
Comcast plans to separate NBCUniversal and Sky into an independent publicly traded company through a tax-free spin-off, following the Versant separation in January and the sale of Sky Germany in May. The transaction would leave the company reshaping its portfolio while broadband pressure remained concentrated in the business it retained.