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Speaking at Morgan Stanley’s 2020 Technology, Media & Telecom Conference in San Francisco in a session that was live-streamed, the exec discussed the impact on entertainment arm NBCUniversal’s theme parks business and potential benefits for its pay TV and broadband business. And he talked about what the virus could mean for the Olympics.
The biggest impact for the company will be at its theme park in Osaka, Japan, which has been closed for two weeks, Roberts said. That will “probably mean a 7 to 9 percent” incremental adverse hit in the first quarter to NBCUniversal’s earnings before interest, taxes, depreciation and amortization depending on the length of the closure. “That park represents about 2 percent of our EBITDA” at Comcast, which in 2019 amounted to $34.3 billion, he said.
Roberts also mentioned that construction on NBCU’s planned China theme park in Beijing was largely unaffected, even though 13,000 construction workers were forced to stop work due to the virus for several weeks over the Chinese New Year and beyond. Since then, “we are back working and are encouraged to go even faster,” he said, adding that the firm’s China team believes the park will “open on time” in May 2021 “despite the disruption.”
Will the Summer Olympics in Tokyo be hit, or even canceled? “The Olympics are obviously on everybody’s mind. What I know is it’s full steam ahead,” Roberts said, adding that the company has contractual protection and insurance. “There should be no losses should there not be an Olympics,” he said. “[There] just wouldn’t be a profit this year.” The exec concluded that he was “optimistic” the Summer Games would happen, adding that he was “looking forward to being there.”
The company’s big cable systems business may even benefit due to coronavirus fears, Roberts said. “In the big picture, with 70 percent of revenue of our company being cable and broadband and that consumption taking place in the home, we are in a very good set of businesses that actually can see [improvement],” he told the conference. “It could actually accelerate trends we are already having.” Added Roberts: “If anything, people appreciate the value of our product even more.”
In 2019, Comcast added more broadband customers than in 2018. However, its total video customer net losses of 733,000 were up from 370,000 in 2018, and management has predicted a further increase in losses this year, emphasizing that it won’t chase unprofitable video customers.
With the coronavirus outbreak continuing to spread around the world, NBCUniversal is among those to have cut out all but the most essential foreign travel for its workers in an attempt to reduce the threat of them contracting the disease, according to sources. The Hollywood Reporter understands that the company is now following U.S. State Department guidelines in advising that non-critical travel outside of an employee’s home country is paused.
Asked about his appetite for mergers and acquisitions, Roberts said Tuesday that Comcast had no “strategic deficits” at this point. He made a similar comment in January, saying that the addition of Sky “positions us to better compete in a world where global scale matters.” The exec said the company feels it has all the elements needed to succeed, including global scale.
Discussing Sky, Roberts said “Brexit has been a big cloud over Europe,” but hopefully that “will get resolved.” He lauded Sky for recent deals that mean Netflix, Warner content and Disney content are locked up in multiyear deals with the European pay TV giant.
Comcast and NBCU executives in January unveiled their plans for streaming service Peacock, which will launch in April as a product they hope will appeal to streaming natives but not necessarily entice existing pay TV subscribers to cut the cord and jeopardize NBCUniversal’s cable business. Roberts has touted Peacock as a “truly differentiated” service that “hits the mark for both consumers and advertisers.” On Tuesday, he said that its inclusion of an advertising model in its business model will mean the company will get to profitability more quickly, with lower losses.
Nintendo, the video gaming giant that has never contributed its brands to a theme park, will join NBCU’s Osaka park, and “what’s been developed may be the most sophisticated attraction ever built,” Roberts said Tuesday. “When you can be the company that people want to partner with — whether it is Steven Spielberg, Nintendo or Harry Potter and J.K. Rowling and deliver globally relationships that include theme parks, it is a pretty great symphony.”
Earlier in the conference day, Verizon CFO Matt Ellis was asked about the impact of the coronavirus on the wireless giant. Right now the financial impact is “not significant, not material,” he said. On the equipment revenue side there is a risk of an impact after the first quarter based on commentary from handset makers, but that is not where most of the earnings come from, the CFO added. Continued Ellis: “We haven’t got enough data yet to see if there is any change in consumer behavior,” but the company will continue to monitor that. He also mentioned no supply chain impact so far, but said that the virus and news around it is “a fluid situation.”
Alex Ritman contributed to this report.
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