NBCUniversal Grows Fourth-Quarter Profit, Comcast Posts Full-Year Pay TV Subscriber Gain

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NBCUniversal CEO Steve Burke

Theme parks and broadcast TV led the growth, film profit was down, as expected, and the cable giant grew video subs for the first time in a decade.

Cable giant Comcast on Thursday reported its fourth-quarter financials, including an improved profit at its entertainment arm NBCUniversal despite lower film results, and said it grew its pay TV subscribers for the full year for the first time in 10 years.

Kicking off earnings season for big Hollywood players, NBCUniversal, led by CEO Steve Burke, posted operating cash flow, the profitability metric the company uses, of $1.77 billion, compared with $1.55 billion in the year-ago period. That was up 7.8 percent when adjusted for the acquisition of a 51 percent stake in Universal Studios in Japan. Quarterly revenue jumped 10.5 percent to $8.45 billion.

The profit growth was driven by higher theme parks and broadcast TV results, with operating cash flow rising 42 percent and 21 percent, respectively, in those units. The broadcast TV gain came amid higher retransmission consent fees and advertising gains due to Thursday Night Football, which also boosted costs though. Theme parks performance benefited from Hollywood’s The Wizarding World of Harry Potter attraction and an acquisition in Japan.

Cable networks profitability climbed 2.4 percent as higher programming and production costs partially offset higher revenue. The election-related political advertising boosted ad revenue at the unit. 

The company's film unit operating cash flow in the fourth quarter dropped 15 percent to $121 million despite higher overall revenue, which was up 2.6 percent to $1.8 billion, and higher theatrical revenue from Sing late in the period and The Girl on the Train, compared with SistersSteve Jobs and Crimson Peak in the year-ago period. But home entertainment revenue fell 36 percent, "reflecting the success of several releases in the prior-year period, including Jurassic World, Minions and Trainwreck." The company also cited "increased expenses driven by DreamWorks [Animation], which included integration and restructuring costs."

Full-year film unit operating cash flow came in at $697 million, compared to the record $1.2 billion reported in 2015, driven by the hits Minions, Furious 7 and Jurassic World

Comcast added 80,000 net video customers in the fourth quarter, down from 89,000 in the year-ago period. For the full year, it added 161,000 video subscribers, compared with a 2015 decline of 36,000. The company said that was its "best result in 10 years." Analysts have been lauding improved subscriber momentum at big cable operators as of late amid ongoing concerns about cord cutting, which has seen some consumers end their pay TV subscriptions, affecting the businesses of distributors and networks companies alike. 

Comcast's quarterly earnings slightly exceeded Wall Street estimates, and the company increased its dividend by 15 percent to 15.75 cents per share and said it expects to repurchase $5 billion of its stock this year. "As we begin 2017, we are well positioned to continue driving growth and shareholder value as we embark on the opportunities ahead," said Comcast chairman and CEO Brian Roberts.

He continued: "This is a special company, with a team I am delighted to work with, executing at a high level." Roberts called the performance at Comcast Cable "exceptionally strong" and added: "NBCUniversal also had a terrific year, fueled by the tremendous success of the Olympics, the opening of new attractions at our theme parks and strong theatrical performances, particularly in animation."