Telecom giant Comcast Corp. (CMCSA, Financial) topped Wall Street's expectations when it reported first-quarter earnings on Wednesday morning.
The Philadelphia-based media and cable company posted adjusted earnings per share of 62 cents, beating Thomson Reuters’ estimates of 59 cents. Revenue grew 10.7% from the prior-year quarter to $22.8 billion, exceeding expectations of $22.74 billion.
The company has been shifting focus to its high-speed internet and filmmaking businesses as cord-cutting by consumers continues to intensify. These efforts appear to be paying off as Comcast reported a net increase of 379,000 high-speed internet customers during the quarter, which was above FactSet’s forecast of 367,000. While the number of customers added increased 8.3% from the prior quarter, it was down 11.7% from the first quarter of 2017.
Comcast attributed its strongest performance to its NBCUniversal business, which was boosted by coverage of the Super Bowl and the 2018 Winter Olympics. The segment, which also owns film studios, theme parks, NBC News and CNBC, raked in $9.53 billion during the quarter, up 21% year over year.
In a statement, Chairman and CEO Brian Roberts highlighted the company’s coverage of the Olympic Games, which were held in PyeongChang, South Korea.
“The Olympics were an incredible event that showcased our capabilities and collaboration throughout the company,” he said. “NBCUniversal’s amazing presentation was the most comprehensive in Winter Games history with over 2,400 hours of coverage across broadcast, cable networks and digital, and Cable’s best-in-class technology delivered an unparalleled viewing experience, resulting in 26% higher ratings among our X1 customers than the national average.”
During the earnings call, Roberts added that the games attracted an average of 20 million viewers during prime time hours over all 18 nights.
Despite the beat, the company’s shares initially fell 2% in premarket trading before reversing upward.
Sky bid
The stock changed direction after Comcast announced it had submitted a bid to acquire Sky PLC (LSE:SKY, Financial), a U.K.-based entertainment and communications company, for 22 billion pounds ($31 billion), or 12.5 pounds per share. The offer challenges a lower bid of 10.75 pounds per share from Twenty-First Century Fox Inc. (FOXA, Financial), who already owns 39% of the company.
During the earnings call, Roberts reiterated the company’s key terms are consistent with its previous proposal, which was made in February.
Chief Financial Officer Mike Cavanagh outlined additional commitments the company intends to keep in regard to Sky and investments in the U.K. during the call. These include establishing “an independent Sky News editorial board," maintaing the investment and not acquiring "controlling interest in any U.K. newspapers.”
“We believe that this is a financially attractive transaction,” he added.
In a statement, Roberts outlined why the combination would be ideal from a business perspective.
“Sky has a strong business, excellent customer loyalty and a valued brand. It is led by a terrific management team who we look forward to working with to build and grow this business,” he said. “With its 23 million retail customers, leading positions in the U.K., Italy and Germany, and its history of strong financial performance, we see significant opportunities for growth by combining our businesses. Sky is a highly complementary business and will expand Comcast’s international footprint in the U.K. and Continental Europe.”
Stock price
With a market cap of $161.43 billion, Comcast was trading around $34.20 on Wednesday morning, up 2.53%. GuruFocus estimates the stock has lost 16% year to date.
Disclosure: No positions.
