'Despicable Me 2' Helps Boost NBCUniversal Third-Quarter Bottom Line
UPDATED: The entertainment company owned by Comcast and led by CEO Steve Burke posted much-improved film results driven by the theatrical success of the animated sequel.
Cable giant Comcast on Wednesday reported higher third-quarter profitability for its entertainment arm NBCUniversal, helped by an improved film performance led by the success of Despicable Me 2.
The entertainment company, headed by CEO Steve Burke, recorded higher operating cash flow than in the year-ago period, but quarterly revenue came in lower than last year. Excluding last year's Olympics revenue, though, the firm posted a revenue increase.
Comcast, led by chairman and CEO Brian Roberts, earlier this year acquired full control of NBCUniversal by buying out a 49 percent stake held by General Electric.
NBCUniversal's operating cash flow of $1.25 billion for the quarter was up 9.6 percent from the year-ago period. Excluding the year-ago Olympics benefit, the figure rose 22.4 percent. Revenue was down 14.2 percent, or up 3.9 percent when adjusting for the Olympics, to $5.85 billion.
The operating cash flow growth was led by a 164 percent improvement to $189 million in the film unit, an 8.6 percent gain in theme parks and a 5.4 percent increase in the cable networks unit. Broadcast TV cash flow fell 61 percent.
Excluding $1.2 billion of revenue generated by the Olympics in the third quarter of 2012, revenue in the broadcast division increased 2.6 percent, driven by higher retransmission consent fees and a 2.6 percent gain in advertising revenue.
In the film unit, revenue increased 3.3 percent to $1.4 billion "driven by higher theatrical revenue from the strong box-office performance of Despicable Me 2, partially offset by a decrease in home entertainment revenue due to lower volume of new releases compared to last year," Comcast said. Operating cash flow increased amid what the company lauded as "the strong performance of the film slate."
Revenue at the cable networks segment increased 4 percent to $2.2 billion amid higher distribution revenue and a 4.6 percent ad gain, partially offset by a decline in content licensing and other revenue. Operating cash flow increased thanks to the higher revenue, but was partially offset by higher programming and production costs. Comcast cited NBCUniversal's "continued investment in original programming and higher sports programming rights costs."
Comcast's overall third-quarter earnings exceeded Wall Street estimates as earnings of $1.73 billion declined from $2.11 billion. Analysts had on average forecast earnings of $1.64 billion. Revenue fell 2.4 percent to $16.2 billion, slightly below expectations.
Comcast's cable systems lost 129,000 video subscribers in the third quarter, compared with a drop of 117,000 in the year-ago period. But Comcast signed on more broadband and telephone subscribers than in the year-ago period. The firm ended September with 21.65 million video subscribers and 20.28 million broadband customers.
In early trading, shares of Comcast were down more than 1 percent to $47.06.
During a conference call with analysts, Roberts raved about NBCUniversal across all divisions.
"So far, we're off to a great start with NBC early season leadership in broadcast television," Roberts said.
Roberts said success in TV is owed in part to The Voice, Sunday Night Football and The Blacklist. He said the 2012 London Olympics generated $1.2 billion in revenue, and he expects big things for the upcoming games as well.
"All parts of Comcast-NBCUniversal will be behind the Sochi Olympics. And then just a few months later we'll do it again with the opening of the much-anticipated Harry Potter 2 [theme park attraction] in Orlando."
Roberts also acknowledged the recent disclosure by Time Warner Cable that company CEO Glenn Britt has cancer.
Said Roberts, "On a tough note, I wanted to acknowledge yesterday's announcement by Glenn Britt about his health. On behalf of all of us at Comcast, the industry and his many friends, we just want to wish you, Glenn, the best as you battle that tough disease."