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Comcast Posts Strong Q4 Results Bolstered by Parks and Peacock, Boosts Dividend by 7%

Growth in theme parks and a nearly 50% increase in subscribers to streaming service Peacock bolstered Comcast revenues and earnings in the fourth quarter of 2023 as the cable giant, which owns NBCUniversal, topped Wall Street expectations.

Here are the top-line results:

Adjusted net income: $3.41 billion, down 3.1% year over year.

Adjusted earnings per share: 84 cents per share, up 2.4% year over year, compared to 80 cents per share expected by analysts surveyed by Zacks Investment Research

Adjusted EBITDA: $8.01 billion, up 0.1% year over year.

Revenue: $31.25 billion, up 2.3% year over year, compared to $$30.41 billion expected by analysts surveyed by Zacks Investment Research

Peacock Subscribers: 31 million paid subscribers, up nearly 50% year over year. Comcast added 3 million subscribers in the quarter.

Comcast CEO Brian Roberts said in a statement that the company generated the highest revenue, adjusted EBITDA and adjusted earnings per share in the company’s history for the third year in a row, with streaming, parks and theatrical all having a strong quarter.

Comcast’s cable business also saw growth in revenue and adjusted EBITDA, but continued to bleed pay-TV and broadband subscribers. “Oppenheimer” boosted Universal Pictures to the top-grossing studio of the year for the first time since 2015, and the company had two of the other top-grossing films in “Super Mario Bros. Movie” and “Fast X.”

Shares of Comcast climbed 4% on Thursday following the earnings announcement.

The NBCUniversal parent reported net income of $3.26 billion, or earnings of 81 cents per share, up 7.8% and 15.7% year over year, respectively. On an adjusted basis, Comcast’s net income fell 3.1% year over year to $3.41 billion, while EPS grew 2.4% year over year to 84 cents.

Adjusted EBITDA, which included $527 million of severance and other charges during the quarter, grew 0.1% to $8 billion.

The media conglomerate generated free cash flow of $1.78 billion and net cash of $5.92 billion during the quarter, up 28.5% and 0.7% year over year, respectively.

Peacock Paid Subs Grow Nearly 50% as Streamer Trims Loss

Peacock ended 2023 with 31 million paid subscribers after adding 3 million during the fourth quarter. The streamer’s adjusted EBITDA loss narrowed to $825 million from $978 million in the prior year period and its revenue grew 57% year over year to $1 billion, compared to $660 million a year ago. 2023 marked peak losses of $2.7 billion for the streamer, with meaningful improvement expected in 2024.

Comcast president Mike Cavanagh touted managing Peacock and its linear TV business as one for the progress in its efforts towards streaming profitability.

“The strategy really is to leverage the great relevant content properties we have such as NBC, which is news, sports and entertainment, obviously Bravo and some of the other assets we have in the cable business, and Universal with the pay-1 window,” Cavanagh told analysts on Thursday’s earnings call. “So when you put it all together, continuing to execute against that, we’re going to look to get more scale and the things we’re doing are both to drive more scale, more subs, but also to get more engagement with the subs we have and drive improvements in churn which we’ve been pretty pleased with.”

Cavanagh added that leveling off the growth rate of programming spend would “clearly” be part of improving Peacock’s losses, but noted that he’s more focused on the long-term “totality of the media business.”

“We’ve navigated a very good path for us,” he said.

Pay-TV and Broadband Continue to Bleed Subscribers

Comcast’s Connectivity & Platforms segment, its cable business, reported adjusted EBITDA of $7.58 billion and revenue of $20.41 billion, up 3.1% and 0.5% year over year, respectively.

Video revenue fell 5.1% year over year to $6.9 billion as the cable giant continued to bleed subscribers from cord-cutting. Advertising revenue fell 13.6% to 1.1 billion due to a decline in domestic political advertising.

The division lost 389,000 video customers and 34,000 domestic broadband customers, but gained 310,000 wireless subscribers during the quarter. Total customer relationships decreased by 183,000 to 52.1 million. Average revenue per user jumped 3.9% as customers connected more devices and spent more for higher Internet speeds.

“With the broadband marketplace remaining extremely competitive, we will continue to manage this balance and expect ARPU growth will remain strong within our historical range and continue to be the driver of our residential broadband revenue growth in 2024,” Comcast Cable CEO Dave Watson told analysts. “While we do not expect subscriber trends to improve in the coming quarters, we do expect them to improve over time at the macro level.”

Parks, Peacock and Studios Boost Growth

The Content & Experiences segment, which includes media, studios and theme parks, saw revenue grow 5.7% year over year to $11.5 billion and adjusted EBITDA grow 2.3% year over year to $932 million.

The media division, which includes Peacock, saw revenue grow 3.1% year over year to $6.98 billion, driven by higher domestic distribution, international networks and other revenue, partially offset by lower domestic advertising revenue. Adjusted EBITDA fell 50.2% year over year to $108 million due to increased sports programming costs and higher programming costs at Peacock, partially offset by a decrease in content costs at its entertainment television networks, including the impacts of the Writers Guild and Screen Actors Guild work stoppages in the current year period.

Domestic advertising revenue fell 6.9% year over year to $2.64 billion, reflecting the unfavorable comparison to Telemundo’s broadcast of the FIFA World Cup in the prior year period, while domestic distribution revenue grew 8.5% year over year to $2.74 billion, driven by higher revenue at Peacock, and international networks revenue grew 17.3% year over year% to $1.05 billion, reflecting an increase in revenue associated with the distribution of sports channels and the positive impact of foreign currency.

The studios segment reported adjusted EBITDA of $308 million and revenue of $3.06 billion, up 4.3% and 83% year over year, respectively. Revenue increased primarily due to higher theatrical revenue from the performance of titles including “Five Nights at Freddy’s,” “Trolls Band Together,” “The Exorcist: Believer” and “Migration.” Universal released three of the top five movies in 2023: “The Super Mario Bros. Movie,” “Oppenheimer,” and “Fast X.”

Theatrical revenue climbed 58.8% year over year to $343 million, while content licensing revenue fell 0.3% to $2.37 billion. Film studio content licensing revenue was offset by TV studio content licensing revenue, primarily due to the timing of when content was made available under licensing agreements, including the impacts of the Writers Guild and Screen Actors Guild work stoppages in the current year period.

The theme parks segment reported a record adjusted EBITDA of $872 million and revenue of $2.37 billion, up 11.6% and 12.2% year over year, respectively. The revenue increase was driven by higher revenue at Comcast’s international and domestic theme parks. Domestic theme parks revenue increased, reflecting higher revenue at its Hollywood theme park due to the continued success of Super Nintendo World, partially offset by lower revenue at its Orlando theme park which continued to be above comparable pre-pandemic 2019 levels.

Boosting the Dividend

Comcast also increased its dividend by 8 cents per share, or 6.9% year over year, to $1.24 per share on an annualized basis for 2024.

In accordance, with the increase, Comcast’s board of directors declared a quarterly cash dividen of 31 cents per share, payable on April 24, to shareholders of record as of the close of business on April 3. The board also authorized a new $15 billion share repurchase program, effective Friday.

Comcast paid dividends totaling $1.2 billion and repurchased 81.9 million of its common shares for $3.5 billion, resulting in a total return of capital to shareholders of $4.7 billion.

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