Almost exactly six years after NBCUniversal first launched Peacock, the streaming service reported its first-ever profitable quarter.
Comcast reported its Q2 earnings early Thursday, with EBTIDA of $189 million, and subscribers growing to 48 million, driven by the NBA playoffs, FIFA World Cup, and Love Island.
Overall, Comcast’s content and experiences businesses reported revenue of $10.7 billion, up 22.9 percent from a year ago, and adjusted EBITA of $1.3 billion, up 7.1 percent.
Media revenue was $5.7 billion, up 25 percent, with adjusted EBITDA of $708 million. The FIFA World Cup, for which Telemundo had Spanish-language rights, brought in an astonishing $440 million in incremental revenue in the quarter, but the company would have been up regardless.
Driven by the Super Mario Galaxy Movie and Obsession, studios revenue soared 25 percent to $3 billion, with adjusted EBITDA of $202 million. Comcast co-CEO Mike Cavanagh also called out Christopher Nolan’s The Odyssey, even though it did not contribute to Q2, telling Wall Street analysts that the film “became one of the defining theatrical events of the year, reinforcing the power of our creative partnerships and ambitious storytelling, with The Odyssey becoming Nolan’s biggest global opening of all time.”
As for Peacock, executives did warn that “profitability is going to vary quarter by quarter, just based on the timing of sports schedules and other content hitting one quarter versus another,” suggesting that the service could return to the red in future quarters, and recommending that analysts compare its performance year-over-year, rather than quarter-to-quarter.
That said, Comcast warned that its theme parks business is experiencing softness, even with revenue rising 2.7 percent to $2.4 billion. Adjusted EBITDA was down 5.1 percent to $609 million.
“While we are seeing some near-term softness in Theme Parks, we remain confident in the long-term opportunity, supported by our world-class brands, attractive locations and proven ability to create attractions and experiences that drive real consumer demand,” Brian Roberts and Mike Cavanagh said in a statement.
“We believe there are some temporary factors at work, including higher fuel prices and weaker consumer sentiment. But we are watching these trends closely,” Cavanagh added on the company’s earnings call.
Comcast is in the process of splitting itself in two, separating its Comcast cable and connectivity business, which will be led by CEO Michael Angelakis and its entertainment and content business, which will be led by Cavanagh.
On the company’s earnings call, Brian Roberts told analysts that “we’ve talked with our key constituencies, employees at every level, and most of our key partners, and the reaction has been overwhelmingly positive. I feel more positive and energized today than I was on the day we announced it.”
Cavanagh said that the deal is expected to be completed in a year, adding that “our intention is to set both companies up with strong investment-grade profiles and the financial strength and flexibility to pursue their respective growth strategies.”
“This is an extremely valuable collection of assets at NBC, and we think that separating the business, setting it up on its own is going to give it the focus and opportunity and platform to invest behind the growth opportunities that it has in its own businesses and the spaces around these businesses that offer growth and where the business has the right to play,” he added. “I do believe that NBCUniversal and Sky do have the heft and the relationships and the operational capabilities to continue to be a major player as an independent.”
He went on to say, however, that they will “look for opportunities to partner, bundle, and exhibit other people’s IP in our in our parks and create IP in our studios that go to other platforms. I think that’s a good strategy for the collection of assets we have, and I think presents you know a path for growth in this business over time.”
Comcast overall is in the midst of a transition, led by its connectivity business, which has seen softness in an extremely competitive environment. Comcast as a whole reported revenue of $29.9 billion, down 1.2 percent, and adjusted EBITDA of $8.9 billion, down 13 percent. The company’s connectivity business is executing on its “strategic pivot,” the executives said, with results expected by next quarter.
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