NFL Will Stay Profitable for NBC, Pay TV Bundle Will Remain "Very Good Business," NBCU CEO Says
Steve Burke also highlights the strength of the ad market, while Comcast boss Brian Roberts sees no need for deals that "change the face" of the company.
Cable giant Comcast and entertainment arm NBCUniversal are feeling confident with their growth momentum headed into 2016 and the assets they own, top executives said Wednesday during their fourth-quarter earnings conference call.
The call came after Comcast, led by chairman and CEO Brian Roberts, reported improved fourth-quarter and full-year pay TV subscriber trends and better financials for its entertainment arm NBCUniversal, led by CEO Steve Burke. The entertainment firm's film and theme park units posted record full-year operating cash flow, the profitability metric the company uses.
Burke was asked on the call about the outlook for the pay TV bundle, saying that "great channels with great" content, such as USA's Mr. Robot or NBC's Olympics, will stay in the bundle. And that will mean that the bundle will continue to be "a very good business for a very long time."
Comcast said 75 percent of its video subscriber additions in the fourth quarter were for bigger bundles, with so-called "skinny" bundles still accounting for a small percentage of users.
Burke also said that NFL football is profitable for NBCUniversal now, and adding Thursday night games under a new deal with CBS would expand football programming while keeping it profitable. Calling the price paid a "very fair rate," he said the NFL provides the "most powerful programming on TV" and content that draws big audiences, meaning it is becoming more valuable over time when audiences continue to fragment.
Roberts, meanwhile, was asked about his interest in possible transformative M&A opportunities, such as possible wireless deals or European telecom assets. The Comcast boss said that any chatter involving Comcast's interest in businesses is often just "invented," and that he really likes the company and its business mix. "There is nothing we feel we have to do," and management is focusing on executing, he said, but new opportunities that grow shareholder value will always be looked at. Roberts concluded by saying there was no need to "change the face" of the company, and calling Comcast NBCUniversal "a special company" at a time of change, he said it was well positioned going forward.
Roberts on Wednesday lauded NBCU and Burke for "again" exceeding expectations in 2015 and making "incredible" progress thanks to a collaborative approach. He highlighted that the entertainment company has doubled its operating cash flow since Comcast first acquired it in early 2011.
Roberts also lauded the film unit for its most profitable year ever, adding that the studio was "in a great position" for continued success. And he lauded NBCUniversal Cable chair Bonnie Hammer and her team for their unit's performance.
Overall, Roberts said NBCUniversal was excited about its "range of opportunities," including showing some Thursday night NFL games and airing the Rio Summer Olympics, which he vowed would be the most technologically advanced Olympics coverage ever.
"2015 was not without its challenges," but the company didn't allow them to become "real distractions," Roberts said in opening the earnings call. That was read as a reference to the company's decision to give up on its planned acquisition of Time Warner Cable amid regulatory opposition and investor fears over cord-cutting. He called Comcast Cable boss Neil Smit and his management team "heroic" for bringing in its strongest subscriber year in years.
Comcast CFO Michael Cavanagh on Wednesday said strong demand for scatter advertising, or ads bought closer to air time, into the first quarter. Burke added that it was stronger than in recent history, which could be a boon for the upcoming upfront ad market.
In December, Burke said that while 2016 will be a more challenging year for the film unit due to the record 2015, it was is in good shape to continue its financial momentum despite a smaller release slate. He said back then that the studio has a "strategic" slate with big franchises and animation titles in 2016, "but not as big a slate" as in 2015. “We have lifted the cruising altitude of the film business and will continue to drive that," he said. He reiterated those comments on Wednesday.
Cavanagh also once again touted growth in retransmission consent fee revenue at NBC, saying they hit $535 million in 2015. He also reiterated his forecast for $800 million in retrans revenue in 2016, well above the $4 million the company earned years ago when it first started receiving retrans fees from pay TV operators.
Comcast will participate in the FCC spectrum auction, Cavanagh also confirmed on Wednesday. The firm had previously said it would participate on the NBC side, while on the cable side, it would study bidding. The company didn't detail its plans. Stations in any such deals would sell spectrum they use to wireless broadband service providers.
Comcast shares were up 2.4 percent as of 11 a.m. ET, while the broader market declined.