Peacock quarterly loss narrows to $348M as subscribers drop to 33m

Peacock, the streaming service of Comcast’s entertainment unit NBCUniversal, grew its second-quarter revenue and narrowed its loss to $348 million from $651 million in the year-ago period, and $639 million in the first quarter of 2024. The streamer ended June with 33 million paying subscribers, compared with 33.5 million as of the end of March, the company also said on Tuesday. But it touted a gain over the year-ago figure of 24 million.

“Peacock revenue increased 28 percent to $1.0 billion” in the latest quarter, the company also said, touting the “best year-over-year improvement in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for any quarter since launch in 2020.”

As streaming profits, which have so far been elusive for most industry giants, remain in focus for Wall Street, Peacock previously posted a full-year 2023 loss of $2.75 billion. But Comcast CFO Jason Armstrong earlier this year emphasized that “2023 marked the peak in annual losses at Peacock, and for 2024 we expect to show meaningful improvements in losses, versus 2023.”

During a morning conference call, Comcast president Mike Cavanagh addressed a question from an analyst on when Peacock might become profitable, but without precision. “I don’t really look at Peacock standalone. I mean it’s an interesting exercise and I’m happy to share the numbers on the losses on Peacock as we build it,” he argued.

Cavanagh added Peacock was evolving in tandem with Comcast’s legacy TV assets. “We are thinking about it over multiple years. I’m very confident that what we’re doing around Peacock in the media business, operating together, is going to put us on a path to optimize that business. And this is a year where we see the growth in Peacock offsetting the decline in some of our linear businesses, and that’s basically a trend I would expect to see carry forward,” he said.

Peacock recently unveiled price increases set to go into effect on July 18 for new customers and Aug. 17 for existing subscribers. The Paris Olympics opening ceremony is scheduled for July 26.

In its quarterly earnings report on Tuesday, Comcast, led by chairman and CEO Brian Roberts, also disclosed that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) differed quite a bit for different segments of NBCU. Peacock’s losses are disclosed as part of NBCU’s media unit.

Comcast’s Roberts during a morning analyst call poured water on talk of the media conglomerate engaging in pricey mergers and acquisitions amid current industry consolidation. “Instead of engaging in a process to buy content companies, we are focused primarily on organic opportunities like the NBA, one of of the most coveted sport franchises across the globe, which will help drive growth for us well into the future,” he said.

During the morning call, Cavanagh disclosed his company had an 11-year TV rights deal in place with the NBA, which includes exclusive games for Peacock to drive new subscribers and retain existing ones for the evolving streaming platform. “The long term goal for Peacock is to have a service that is a balance of sports, entertainment and news,” Cavanagh told analysts.

“Opportunities like this come along very rarely when there’s a long term relationship up for grabs,” Comcast CEO Roberts added during the morning call about the NBA deal and the sports content to drive down NBCUniversal’s linear TV and streaming pipelines. “There’ll be a lot of content on NBC, but way more content on Peacock and that allows for the trends that we’re seeing in viewing behavior,” he added as TV viewership increasingly shifts to streaming platforms industry-wide.

Meanwhile, Comcast’s core cable and telecom business once again lost pay-TV and broadband subscribers in the second quarter. The company lost 120,000 broadband users in the latest period, up from a 19,000 drop in the second quarter of 2023. But video subscriber losses narrowed from 543,000 to 419,000.

Comcast Cable CEO Dave Watson told analysts that the video business was being paired with broadband offerings to continue to trim subscriber losses this year, compared to 2023. “At the end of the day, we’re focusing on value, combining linear streaming considerations on a case-by-case basis,” he told analysts.

Second-quarter revenue for the company’s media unit increased 2.1 percent to $6.3 billion “due to higher domestic distribution and international networks revenue, partially offset by lower other and domestic advertising revenue,” the company said. Domestic distribution revenue, up 5.7 percent, was boosted by higher Peacock revenue, “driven by an increase in paid subscribers compared to the prior year period.” But domestic advertising revenue dropped 1.7 percent, “primarily due to lower revenue at our networks, partially offset by an increase in revenue at Peacock.”

Adjusted EBITDA in the media unit jumped 9.0 percent to $1.4 billion due to higher revenue and virtually unchanged operating expenses. “The consistent operating expenses were due to decreases in marketing and promotion costs and programming and production costs, offset by an increase in other expenses, each primarily related to Peacock,” the company said.

Second-quarter revenue in the studios segment fell 27.0 percent to $2.3 billion, “primarily due to lower theatrical revenue and content licensing revenue,” which declined 74.1 percent and 5.9 percent, respectively. Theatrical revenue was hit in comparison to “higher revenue from the volume and strength of theatrical releases in the prior-year period, including The Super Mario Bros. Movie and Fast X,” the company said. “Content licensing revenue declined primarily due to the timing of when content was made available by our television studios.”

Adjusted EBITDA for Studios decreased 51.4 percent to $124 million due to lower revenue, which more than offset lower operating expenses. “The decrease in operating expenses primarily reflected lower programming and production expenses, mainly due to lower costs associated with theatrical releases,” the firm said.

Finally, second-quarter revenue in its theme parks unit fell 10.6 percent to just below $2 billion. Comcast’s Cavanagh on the morning analyst call touted the theme parks division, despite lower guest attendance and revenue at domestic locations. “While the parks results are below our original expectations for the year, we still view parks as a terrific long term growth business for us,” he argued.

Adjusted EBITDA for the theme parks business fell 24.1 percent to $632 million, “reflecting lower revenue, which more than offset lower operating expenses.”

Comcast shares fell by $1.01, or 2.5 percent, to $38.52 in Tuesday pre-market trading as investors digested the company’s latest financial results. Hollywood Reporter