Telecommunications and media conglomerate Comcast Corp. (CMCSA, Financial) reported strong second-quarter earnings before the opening bell on Thursday.
The Philadelphia-based company, which owns a number of internet and cable networks, film production companies and theme parks, posted adjusted earnings of 69 cents per share, topping Refinitiv analysts’ estimates of 55 cents. Revenue of $23.72 billion also edged past expectations of $23.57 billion.
Despite the Covid-19 pandemic lockdowns that persisted throughout most of the second quarter, high-speed internet subscriptions grew at a faster-than-expected rate. Comcast recorded 323,000 net adds for the three months ended June 30, surpassing the 247,000 adds that were expected based on a FactSet survey. As the number of internet customers grew, however, the company also reported 477,000 in total video customer net losses.
Shares initially popped in premarket trading following the better-than-expected results, but the gains were pared during the earnings call after NBCUniversal CEO Jeff Shell said effects from losses in film revenue will be felt in 2021.
Although theater closures impacted the filmed entertainment business, which recorded an 18.1% decline in sales to $1.2 billion, its content licensing revenue grew 19.5% as it shifted releases for movies like “Trolls World Tour” to premium video on demand.
Despite the postponement of major live sports events like the summer Olympics, the company also noted that it has retained 95% of its Sky sports customers since the pandemic began. Regardless, its sales still declined 15.5% to $4.1 billion, which included a 43% decline in Sky advertising revenue. Sky CEO Jeremy Darroch noted during the earnings call that ad revenue is forecasted to continue to see challenges.
Other divisions took major hits as well. For instance, the NBCUniversal segment saw sales decline 25.4% year over year to $6.1 billion as advertisers pulled back on spending. Theme parks were impacted the most as they were forced to shut down operations due to the pandemic. Revenue in this segment for the quarter plummeted 94.1% to $87 million.
One bright spot for Comcast was its new streaming service Peacock, which has already recorded 10 million sign-ups since being launched in April. During the earnings call, Shell said that the platform is “a bit of a silver lining for next year,” as it will hopefully have further reach by then.
In a statement, Comcast Chairman and CEO Brian Roberts praised the company’s response to the Covid-19 crisis, saying it “has been extraordinarily fast and effective, and our products and brands continue to resonate strongly with our customers across all segments and all geographies.”
“Overall, based on our results and the many organic growth opportunities that we have across our company, I am confident in our ability to continue to successfully navigate the impact of COVID-19, and emerge from the crisis even stronger,” he added. “I could not be more proud of how our teams across Comcast Cable, NBCUniversal and Sky are together managing the business.”
With a $199.82 billion market cap, Comcast shares were trading around $44.07 on Thursday. GuruFocus estimates the stock has declined 3% year to date.
According to GuruFocus’ Industry Overview, Comcast is the third-largest player in the diversified media sector with a weight of 18.5%. Other top players are Netflix Inc. (NFLX, Financial) with 21.9% and The Walt Disney Co. (DIS, Financial) at 20.8%.
Disclosure: No positions.
Read more here:
- Andreas Halvorsen Takes an Interest in GoHealth Following Its IPO​
- Seth Klarman Strengthens Viasat Connection
- The Top 5 Trades of the Eaton Vance Worldwide Health Sciences Fund
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
