25 June 2019

Comcast Earnings Boosted by ‘Jurassic World’

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In the face of cord-cutting and increased competition from streaming services, Comcast Corp. managed to stem the loss of cable-TV customers and reaffirmed its commitment to the video business. Comcast on Thursday reported that second-quarter profit rose 7.3% as the movie “Jurassic World” set box-office records and revenue at the high-speed Internet and business-services divisions grew, offsetting softness at the company’s TV networks.

Comcast shed 69,000 cable TV customers in the seasonally weak second quarter, an improvement from the 144,000 subscribers lost a year ago. Comcast executives attributed the improvement to the accelerated rollout of their next-generation X1 set-top box and guide, as well as recent investments to improve customer service. Chief Executive Brian Roberts said that Comcast is in talks with several other operators, including Cox Communications and Shaw Communications, to license its X1 product.

For the quarter ended June 30, Comcast reported net income of $2.14 billion, or 84 cents a share, up from $1.99 billion, or 76 cents, a year earlier. Revenue grew 11% to $18.74 billion. Earnings matched analysts’ average estimate from Thomson Reuters, while revenue topped expectations of $18.14 billion. The cable giant has been refocusing after emerging in April from 14 months in limbo, when it walked away from the ill-fated $45 billion acquisition of Time Warner Cable because of stiff regulatory resistance. Since then, Comcast has announced plans to offer a new $15-a-month broadband video service dubbed “Stream” for its Internet customers and started testing a videogame streaming service over its set-top boxes in partnership with Electronic Arts.

The company is trying to bolster its Internet offerings and target younger consumers as more customers in the U.S. opt to cut the cable TV cord in favor of cheaper video alternatives. In May, Comcast Cable President Neil Smit said the company’s Internet subscribers had surpassed its video customers, a significant milestone for a firm that grew up selling cable TV. As of June 30, Comcast had 22.3 million video customers, compared with 22.5 million Internet customers.

Broadband subscribers outnumber video subscribers, but the video business still brings in far more revenue. Broadband revenue increased 10% to $3.1 billion, while video sales rose 3.7% to $5.4 billion thanks to higher cable bills and more customers signing up for advanced services. Business services revenue jumped 20% to $1.2 billion, helping offset a 2.1% decline in voice revenue. Overall at the cable business—which includes video, broadband and voice connections and accounts for the bulk of Comcast’s top line—revenue rose 6.3% to $11.73 billion.

At the cable networks division, NBCUniversal’s biggest segment by sales, revenue decreased 1% to $2.45 billion. Operating cash flow, a measure of profitability, declined 4.6% amid continued ratings pressure. Revenue at the broadcast-TV segment, which includes the flagship NBC network, was flat, while its operating cash flow declined 3.7%.

Television networks have spent the past few months negotiating with advertisers to lock in ad-spending commitments for the coming season. While any public comments about upfront ad sales are notoriously full of posturing and fuzzy math, declines this year are likely at least as bad as last year. Hits like “Jurassic World,” “Furious 7” and “Pitch Perfect 2” helped operating cash flow at the filmed entertainment division more than double to $422 million in the second quarter.

Click here to access the full article on The Wall Street Journal. 

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