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13th May 2022

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Comcast Just Reported Earnings. Here Are the Numbers to Know.

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Infrastructure-heavy telecom businesses have a high degree of operating leverage, meaning that profits rise faster than revenues.


Courtesy of Comcast

Continued growth at

Comcast’s

cable business outweighed continued pressures at its media segments in the first quarter, bringing in more revenue and earnings than expected.

The company added more broadband internet subscribers than anticipated in the period, and its Peacock streaming service garnered millions of new sign-ups. Overall, the results showed a growing cable segment continuing its momentum and media businesses primed for a post-pandemic rebound.

Comcast stock was up close to 4% in early trading on Thursday.

Comcast (ticker: CMCSA) reported 71 cents in earnings per share, or 76 cents after adjustments. That was up 7% year over year and 17 cents ahead of Wall Street analysts’ average forecast. Comcast’s sales came in at $27.2 billion in the quarter, up 2.2%, and roughly $500 million above consensus.

Xfinity remained the workhorse in Comcast’s portfolio. Demand for faster internet connections boomed during the pandemic, and Comcast added millions of new subscribers or upgraded existing ones over the past year. That momentum slowed slightly in the first quarter, but that came after a record 2020, when Xfinity added a total of about 2 million broadband subscribers.

In the first quarter, the company added a net 461,000 broadband customers, and broadband revenue was up 12% year over year. Cable TV revenues were about flat despite the loss of 491,000 cord cutters. And Comcast continued to rapidly grow its Xfinity Wireless business, with revenue there up almost 50%. 

All together, Comcast’s cable business brought in $15.8 billion in sales last quarter, up 5.9% and ahead of Wall Street consensus call. The segment’s adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, totaled $6.8 billion, up 12.4% and also better than analysts expected.

Infrastructure-heavy telecom businesses have a high degree of operating leverage, meaning that profits rise faster than revenues—and vice versa. The huge fixed costs of their networks can be spread out over a larger subscriber base as people sign on, while the variable cost of adding each new customer to a network that is already built is small. That’s what investors love about Xfinity: It is at the stage of its growth where earnings are taking off despite much smaller increases in revenue.

The situation looks rather different at Comcast’s media and entertainment businesses. NBCUniversal remains affected by the Covid-19 pandemic in the near term, while a long-term consumer shift to streaming is pressuring its legacy media properties. 

NBCUniversal revenues were down 9.1% year over year, to $7.0 billion, with adjusted Ebitda for the segment down 11.8%, to $1.5 billion—but better than the analyst consensus nonetheless. Lower advertising revenue, closed movie theaters, and limits on capacity at theme parks were to blame.

The bright spot for NBCUniversal last quarter was Peacock, a streaming service it launched last year. The service hit 42 million sign-ups at the end of the first quarter, up by about 9 million from three months earlier. Comcast CEO
Brian Roberts
credited the addition of The Office and other exclusive content to Peacock in the first quarter for the growth. 

Still, investments in content far exceeded the revenues Peacock is bringing in. The service lost $277 million in adjusted Ebitda on $91 million of revenue in the period. But it is still early in Peacock’s growth, and the business is not unlike Xfinity in its operating leverage: As the number of subscribers grows, Comcast can spread those content costs over more paying or ad-supported viewers, and earnings will grow faster than revenues.


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Sky—Comcast’s European media and pay TV business—endured a 39.6% drop in adjusted Ebitda on a constant currency basis last quarter, to $364 million, while revenues rose 2.0%, to $5 billion. Roberts noted on Thursday’s earnings call that higher sports programming costs in the quarter were responsible for the divergence in revenues and earnings.

Comcast investors aren’t likely to be very concerned about the media businesses’ lackluster performance in the first quarter. As the world emerges from the Covid-19 pandemic, results there should roar back, while the cable results will continue to deliver. That will add a cyclical kicker to Comcast’s growth in 2021, and could silence calls for it to break up its conglomerate structure for the time being.

Comcast stock has returned 24.2% including dividends since the start of 2020, falling behind the S&P 500’s 32.5% return over those 16 months. It also lags behind cable rivals

Charter Communications

(CHTR) and

Altice USA

(ATUS), which have returned 34.6% and 28.5%, respectively.

Write to editors@barrons.com

2021-04-29 13:43:00


www.barrons.com


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