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Comcast’s entertainment unit NBCUniversal reported lower third-quarter financials as the novel coronavirus pandemic continued to hit results, especially at the conglomerate’s theme parks unit.
TV advertising revenue fell again, but the drop was less pronounced than in the second quarter, which observers have called the bottom of the pandemic hit so far.
Meanwhile, NBCUniversal streaming service Peacock has reached nearly 22 million signups, the company said Thursday.
NBCUniversal overall reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), the profitability metric the company uses, of $1.28 billion for the three months ended Sept. 30, down 38.7 percent from the year-ago period. But management said that excluding theme parks unit losses, NBCU’s EBITDA would have grown 9 percent in the third quarter.
Adjusted EBITDA for the period rose 53.4 percent to $300 million in the film division even though cinemas were closed in most major markets around the world amid the virus crisis. Lower revenue was “more than offset by a decline in operating costs due to lower spending on current period releases as a result of COVID-19,” the company explained.
Film unit revenue decreased 25 percent to $1.3 billion “due to lower theatrical and other revenue, partially offset by higher content licensing and home entertainment revenue.” Theatrical revenue fell 94.7 percent, “primarily driven by theater closures as a result of COVID-19, but content licensing revenue increased 14.5 percent “due to the timing of content provided under licensing agreements, including transactions with Peacock.” Home entertainment revenue jumped 49.1 percent, which “included the success of Trolls World Tour.”
In the broadcast TV unit, ad revenue fell 11.5 percent, compared with 28 percent in the second quarter. Broadcast revenue overall rose 8.3 percent to $2.4 billion in the latest quarter amid “higher content licensing revenue and distribution and other revenue, partially offset by lower advertising revenue.” Content licensing revenue jumped 65.6 percent, “reflecting the timing of content provided under licensing agreements, including transactions with Peacock.” Distribution and other revenue rose thanks to higher retransmission consent fees. Advertising revenue trends reflected “continued ratings declines, partially offset by higher pricing and local political ad sales,” the firm said.
Adjusted EBITDA in the broadcast unit rose 28.7 percent to $436 million due to the higher revenue, as well as lower advertising, marketing and promotion costs, and lower operating and administrative costs, “partially offset by higher programming and production expenses.”
In NBCU’s cable networks division, ad revenue fell 2.1 percent from the year-ago period, compared with a 27 percent drop in the second quarter. Overall unit revenue fell 1.3 percent to $2.7 billion due to lower ad and distribution revenue, partially offset by higher content licensing and other revenue. Distribution revenue fell because of “credits accrued at some of our regional sports networks resulting from the reduced number of games played by professional sports leagues due to COVID-19 and a decline in subscribers, partially offset by contractual rate increases,” the company said.
Adjusted EBITDA in the cable networks unit dropped 8.9 percent to $870 million because of the lower revenue and higher programming and production expenses, “partially offset by lower advertising, marketing and promotion costs and other operating and administrative costs.” The increase in programming and production expenses was primarily driven by an increase in sports programming costs as sports leagues returned to action.
Just like in the second quarter, the theme parks unit swung to a loss, because of the park closures amid the pandemic. Revenue decreased 80.9 percent to $311 million, “primarily due to Universal Orlando Resort and Universal Studios Japan operating at limited capacity, while Universal Studios Hollywood remains closed.” The units adjusted loss reached $203 million after a year-ago profit of $731 million.
Comcast is led by chairman and CEO Brian Roberts, with NBCU led by CEO Jeff Shell.
Comcast’s high-speed internet service posted record net customer additions of 633,000 in the third quarter, while pay TV customer losses amounted to 379,000.
“We are nearly eight months into this pandemic — and despite many harsh realities, I couldn’t be more pleased and proud of how our team has worked together across the company to find safe and creative solutions to successfully operate in this environment,” Roberts said. “We are executing at the highest level; and perhaps, most importantly, accelerating innovation, which will drive long-term future growth.”
He added: “Our integrated strategy is also driving results in streaming with nearly 22 million signups for Peacock to date, and we are exceeding our expectations on all engagement metrics in only a few months. And Sky continues to add customer relationships at higher prices while reducing churn to all-time lows in our core U.K. business.”
Concluded Roberts: “Going forward, and as we emerge from the pandemic, we believe we are extremely well-positioned to provide seamless and integrated experiences for our customers and to deliver superior long-term growth and returns for our shareholders.”
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