Comcast profits soar with strong broadband growth; Universal Pictures disappoints
Philadelphia cable juggernaut Comcast Corp. — fresh off its defeat in the bidding war for 21st Century Fox’s entertainment assets — posted strong second-quarter profits Thursday boosted by its broadband business.
Revenue in the second quarter was flat at its NBCUniversal media unit due to a weak performance from Universal filmed entertainment in Los Angeles. But there was growth at MSNBC, which continues to enjoy a “Trump bump,” and at other cable TV channels. Spanish-language Telemundo gained market share with its broadcast of the FIFA World Cup from Russia, generating record ratings with Mexico’s early-round win over Germany.
Comcast Chief Executive Brian Roberts glossed over his decision to concede the Fox assets to the Walt Disney Co., which agreed to buy them for $71.3 billion.
Comcast remains in the hunt to buy European pay-TV giant Sky and it has the highest bid — $34 billion — although Disney and Fox are expected to drive up the price of Sky with another offer.
“We are focused on Sky now,” Roberts told analysts. “In the case of Fox, it was a unique opportunity. We thought it was mostly about an international expansion opportunity. Ultimately, we pulled back because we thought that we couldn’t build enough shareholder value.”
Overall, Comcast revenue increased 2.1% to $21.74 billion on the strength of its internet service business. Comcast’s net income soared 27.6% to $3.2 billion — or 69 cents per share — from $2.5 billion, or 52 cents per share, during the 2017 second quarter.
The company surpassed analyst estimates with adjusted profit of 65 cents per share. Analysts polled by FactSet expected 60 cents a share.
“I’m really pleased with our quarterly results,” Roberts said. “We have a unique and special company with a terrific team and great operating momentum.”
In the April-June quarter, Comcast added a net of 182,000 customers with 260,000 new broadband Internet customers. It lost 136,000 cable TV subscribers in the quarter. The company provides at least one of its products (broadband internet, phone or cable TV service) to 29.8 million customers. Cable revenue increased 3.4% to $13.7 billion.
Investors were pleased with the results. Comcast shares gained nearly 4% Thursday, or $1.29, to $34.71. Comcast shares are down 15% this year amid worries about Roberts’ appetite for mergers.
“Investors didn’t want Comcast to buy Fox, and they don’t want Comcast to buy Sky,” cable industry analyst Craig Moffett wrote in a research note. He suggested the company buy Charter Communications instead.
At NBCUniversal, the film studio was the laggard. Filmed entertainment revenue declined 20% to $1.7 billion as the studio faced tough comparisons because last year’s “The Fate of the Furious” was driving box office results. Universal opened its big summer bet, “Jurassic World: Fallen Kingdom,” in late June so it had less than 10 days of box office returns. Adjusted earnings before interest, taxes, depreciation and amortization (Comcast’s metric for profit) for the studio fell 52% to $138 million.
NBCUniversal’s largest division — its cable TV channels, including CNBC, Syfy, USA, Bravo and E! — grew revenue 8% to $2.9 billion. Cable channel adjusted earnings before interest, taxes, depreciation and amortization topped $1 billion, an increase of 12.5%.
The NBC broadcast network, TV stations and Telemundo increased revenue 6.7% to $2.4 billion. Broadcast EBITA was up less than 1% to $417 million. The division had higher costs to cover the World Cup in Russia.
Theme parks, including Universal Studios in Orlando, Fla., and Los Angeles grew revenue 3.6% to $1.4 billion. Theme park earnings were up 3.4% to $569 million.
Comcast’s diversity of businesses — the company acquired NBCUniversal in 2011 — has helped it grapple with industry challenges. Traditional media companies like NBCUniversal have seen their turf invaded by tech giants, including Netflix, Facebook, Amazon.com and Apple, which have deep pockets, global businesses and direct relationships with consumers.
But even as customers cut the cable cord, they still pay for internet service and Comcast is the nation’s largest internet service provider.
UPDATES:
1:15 p.m.: This article was updated with analyst commentary and closing stock price.
This article was originally published at 7:55 a.m.
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