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NBCUniversal’s third-quarter adjusted earnings jumped 48.2 percent as its theme parks unit swung to a profit after a coronavirus pandemic-induced year-ago loss and the bottom line of its media unit rose as the Tokyo Summer Olympics boosted advertising revenue, partially offset by higher costs.
NBCU’s third-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached $1.35 billion, compared with $910 million in the same period of 2020. Quarterly revenue jumped 57.9 percent to $10 billion from $6.33 billion in the year-ago period.
Within NBCU, studios unit revenue rose 26.8 percent in the third quarter on higher theatrical and content licensing revenue, but adjusted EBITDA fell 47.3 percent due higher operating expenses “driven by higher programming and production expenses, reflecting higher amortization of television and film production costs in the current year period and compared to the prior year period when production was impacted due to COVID-19, as well as an increase in advertising, marketing and promotion expenses, reflecting a higher number of theatrical releases in the current period.”
Among movies playing into the third quarter were F9: The Fast Saga, which had debuted at the end of the second quarter, Candyman and The Boss Baby: Family Business. In the year-ago period, many cinemas were closed due to the coronavirus pandemic.
Media unit revenue soared 47.5 percent to $6.8 billion in the third quarter, “reflecting higher advertising revenue and distribution revenue,” the company said. Excluding $1.8 billion of revenue generated by the broadcast of the Tokyo Olympics, media revenue would have increased 9.2 percent. Advertising revenue jumped 73.0 percent thanks to the Tokyo Olympics, higher pricing and additional Peacock sales, partially offset by the timing of other sporting events and a decline in ratings. Distribution revenue rose 36.2 percent, driven by the Olympics, contractual rate increases and Peacock, “partially offset by a decline in subscribers at our networks.”
Adjusted EBITDA in the media unit edged up 1.2 percent to $997 million in the third quarter as the higher revenue was partially offset by an increase in operating expenses, which was “primarily driven by higher programming and production expenses, reflecting higher sports programming costs associated with the broadcast of the Tokyo Olympics and higher amortization expense related to programming at Peacock, partially offset by the timing of other sporting events.”
Theme parks unit revenue multiplied to $1.4 billion in the third quarter after only reaching $385 million in the pandemic-hit year-ago period. That reflected “improved operating conditions compared to the prior-year period, when each of our theme parks was either operating at limited capacity or closed as a result of COVID-19,” the company said. The theme parks division also recorded adjusted EBITDA of $434 million, which included pre-opening costs related to Universal Beijing Resort, compared to a $174 million year-ago loss. It was the unit’s most profitable quarter since the start of the COVID pandemic.
At its core cable systems, media, entertainment and technology conglomerate Comcast reported a drop in pay TV subscribers and growth in broadband users after previously warning that the latter had slowed late in the third quarter. Comcast lost 408,000 net video customers in the latest period, after a drop of 273,000 in the third quarter of 2020. It added 300,000 broadband subscribers after a 633,000 gain a year earlier.
At European pay TV giant Sky, quarterly adjusted EBITDA increased 88.8 percent to $971 million. Revenue climbed 4.1 percent to $5.0 billion, but it would have decreased slightly when assuming constant currency exchange rates. Advertising revenue increased 15.6 percent to $561 million, “reflecting an overall market recovery compared to the prior-year period.” Direct-to-consumer revenue of $4.1 billion was unchanged amid “an increase in customer relationships and average revenue per customer relationship in the U.K., offset by a decrease in customer relationships and average revenue per relationship in Italy,” which was mainly due to the impact of the reduction in Sky’s rights to Serie A soccer league games.
“I am pleased with our strong operating and financial results this quarter,” said Roberts. “Each of our businesses posted significant growth.” He added: “Our results at NBCUniversal continue to be driven by the ongoing recovery at our domestic theme parks, as well as the success of our linear and streaming media platforms.”
Also on the earnings call, Roberts said the company’s Orlando theme park “just reported the most profitable quarter in its history despite having virtually no international guests due to COVID-related travel restraints.”
Meanwhile, management signaled it was in no hurry to exit Comcast’s Hulu stake. Under a previously announced deal, the sector giants will end the joint venture in 2024, but Wall Street chatter has wondered if Comcast could hand over its stake earlier. Comcast CFO Mike Cavanagh called the streamer a “great business,” adding that “we are happy to be along for that ride.” He added: “I like the deal we have,” concluding: “It’ll be fine if we stay until the end because I expect the value to keep increasing.”
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