NBCUniversal Financials Grow in First Full Quarter Under Comcast Control

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NEW YORK - Cable giant Comcast Wednesday morning reported higher second-quarter operating cash flow and revenue for NBCUniversal, in which it owns a 51 percent stake.

Before the market open, Comcast, led by chairman and CEO Brian Roberts, also reported stronger overall quarterly financials, including revenue of $14.3 billion, which exceeded Wall Street estimates, and a nearly 16 percent gain in earnings to $1.02 billion. But the largest U.S. cable operator once again lost video subscribers.

Its 238,000 video customer decline in the seasonally slow second quarter was less pronounced that the year-ago drop of 265,000, but Barclays Capital analyst James Ratcliffe had only projected 175,000 video sub losses, and other observers had predicted a drop of around 200,000.

At NBC Universal, revenue rose 17.1 percent to $5.2 billion, while operating cash flow was up 5.2 percent to $1.0 billion. The cable networks unit once again was a key contributor to results in the first full quarter since Comcast in late January acquired its controlling stake in the entertainment company, which is overseen by CEO Steve Burke, but the film unit and theme parks posted higher financial gains in the quarter. The company said it invested in more new shows in cable and broadcast in the latest period.

Film revenue rose 21 percent to $1.25 billion as operating cash flow multiplied from a low $4 million to $27 million driven by higher theatrical revenue from the box office performance of Fast Five and Bridesmaids, partially offset by lower content licensing and home entertainment results.

Broadcast revenue climbed 18.5 percent to $1.7 billion on an operating cash flow gain of 8.8 percent to $190 million. The company cited "higher advertising revenue from improved pricing and ratings at the NBC broadcast network, as well as higher content licensing revenue that includes the immediate recognition of revenue related to prior season and library content under a new licensing agreement."

Cable networks unit revenue was up 12.6 percent to $2.2 billion as operating cash flow edged up 1.1 percent to $846 million. Advertising revenue rose 10.3 percent as did distribution revenue, with a 44 percent increase in so-called "other revenue" - driven by the licensing of owned content from the cable production studio - contributing the biggest percentage gain.

During a conference call, Roberts called NBCUniversal's recent long-term deal for Olympics rights was important as it will give the company "a real opportunity" to build out its broadcast network, cable and digital coverage and operations. He vowed that the Olympics deal would be profitable over the term of the agreement.

At Comcast's cable systems, revenue rose 5.6 percent, and operating cash flow was up 6.8 percent.

Roberts in a statement said he was "pleased" with NBCUni's results and highlighted that each of its segments brought in double-digit revenue growth in the latest quarter. "We are confident that the strategic investments we continue to make at NBCUniversal and Comcast Cable are strengthening our businesses, driving profitable growth and building value for our shareholders," he said.

Wells Fargo analyst Marci Ryvicker said NBCUni "outperformed" financial expectations, but video subscriber subscriber momentum was "light."

Roberts on the conference call reiterated that Comcast feels its NBCUni acquisition timing was "just right" and said his team is looking to build long-term value at the entertainment company.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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