Comcast Corp. shares jumped more than 6% after topping analysts’ estimates for profit even as the media and telecommunication conglomerate continues to lose cable TV subscribers and faces increasing competition in broadband services.
(Bloomberg) — Comcast Corp. shares jumped more than 6% after topping analysts’ estimates for profit even as the media and telecommunication conglomerate continues to lose cable TV subscribers and faces increasing competition in broadband services.
The company, which offers wireless and broadband service under the Xfinity brand and owns the NBCUniversal media and entertainment empire, reported earnings excluding one-time items of 92 cents a share on $29.7 billion in revenue. The first quarter results were boosted by gains at its studio and theme park businesses, which opened Super Nintendo World at Universal Studios Hollywood in February. Analysts were looking for profit of 83 cents a share on $29.4 billion in sales.
Shares saw the biggest one day rise in six months, and were up 5.9% to $38.68 at 10:42 a.m. in New York. They are down 13% over the past 12 months.
The company was rocked last weekend by the abrupt ouster of Jeff Shell, the chief executive officer of NBCUniversal, who was fired after it was disclosed he had an inappropriate relationship with an employee.
Comcast Chairman Brian Roberts called it a “tough moment” for the company during an earnings call Thursday. Comcast President Mike Cavanagh has taken charge of the business, and will have to steer the company through a complex set of challenges, from a struggling streaming service to the hemorrhaging of cable TV subscribers.
On the earnings call, Cavanagh said he’d be running the media division for the foreseeable future and that there was no timetable to find a replacement for Shell. Asked if this was a time to consider a options like expanding or exiting the media business, Cavanagh said he expects no sudden shifts. “There is no reason for anyone to think that we’re going to be revisiting strategy,” he said.
Broadband Battle
Comcast added 5,000 customers to its cornerstone broadband service, an area where the company is investing heavily to gain market share and strengthen its brand. Analysts were looking for a loss of about 7,900 internet subscribers, reflecting a reversal from a pandemic surge and a fierce rivalry with wireless broadband and fiber-based home connections.
Cord cutting and competing wireless and fiber competition has eroded Comcast’s traditional customer base. To fight back, the Philadelphia-based company has raised rates and bundled wireless service to try and offset lost revenue. In the first quarter, the company lost 614,000 TV subscribers and gained 355,000 wireless customers.
Comcast’s streaming service Peacock saw a 63% increase in subscribers from a year earlier, bringing the total to 22 million. The video service had an adjusted loss before interest, taxes, depreciation and amortization of $704 million on revenue of $685 million. Analysts predicted an adjusted Ebitda loss for Peacock of $727.9 million on $718 million in sales.
The company said that Peacock losses will probably reach a low point of $3 billion this year, and start to improve after that. The company hasn’t given a time frame for when it expects to reach a profit. Comcast has spent heavily on Peacock, a late entrant in the streaming wars that still trails behemoths like Netflix and Disney+.
Comcast’s theme parks were a bright spot in the quarter, as tourists returned following a pandemic dropoff, boosting adjusted Ebitda by 46%. The Super Mario Bros. movie, which was released in theaters in April and distributed by Universal Pictures, could help sustain growth in the current quarter, Bloomberg Intelligence analyst Geetha Ranganathan wrote in a note.
(Updates shares and adds executive comment starting in the fifth paragraph.)
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