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Comcast Beats Q4 Earnings Expectations, Peacock Grows to Over 20 Million Subscribers

TheWrap 1/26/2023 Lucas Manfredi
Comcast Earnings © Provided by TheWrap Comcast Earnings

Comcast Corporation topped Wall Street earnings expectations for the fourth quarter of 2022, reporting adjusted earnings per share of 82 cents on revenue of $30.55 billion and net income of $3.02 billion on Thursday.

Peacock, which has surpassed 20 million subscribers, added 5 million net paid subscribers in the United States during the quarter, fueled by live sports and its recent films and originals, Comcast said. It marks the best quarterly result since the streaming service's launch in 2020.

But Peacock posted a loss of $978 million in the fourth quarter, widening from a loss of $559 million in the prior year period. Full-year Peacock revenue nearly tripled from $778 million to $2.1 billion. For the fourth quarter, Peacock revenue climbed to $660 million from $335 million during the same period last year.

Analysts expected the NBCUniversal parent's adjusted EPS figure to come in at 77 cents, while revenue was expected to be $30.32 billion, according to a Refinitiv survey.

During the company's earnings call, Comcast president Michael Cavanagh said that full-year losses at Peacock amounted to $2.5 billion in 2022. The company expects Peacock's losses to peak at around $3 billion in 2023.

In Comcast's cable communications segment, revenue increased 1.4% to $16.6 billion in the fourth quarter, driven by increases in broadband, wireless, business services and advertising revenue, partially offset by decreases in video, voice and other revenue. Total customer relationships decreased by 71,000 to 34.3 million in the fourth quarter of 2022.

The company noted that it lost 26,000 broadband customers, citing the negative impact of Hurricane Ian. Excluding the hurricane, Comcast said it would have added 4,000 broadband customers. Additionally, Comcast lost 440,000 video customers and 288,000 voice customers and gained 365,000 wireless lines in the quarter.

NBCUniversal revenue climbed 5.9% to $9.9 billion for the fourth quarter, including $263 million in incremental revenue from the FIFA World Cup. However, adjusted EBITDA decreased 36.3% to $817 million.

In its media segment, revenue increased 2.6% to $6 billion for the quarter, attributed to higher advertising revenue and distribution revenue. Excluding $263 million generated by Telemundo's broadcast of the FIFA World Cup, media revenue decreased 1.9%.

Advertising revenue increased 4%, primarily due to incremental revenue from the FIFA World Cup as well as an increase in Peacock advertising revenue. Excluding the World Cup, advertising revenue declined 5.6%, reflecting a softening in the overall advertising market.

"The ad market steadily worsened over the course of last year," NBCUniversal CEO Jeff Shell said. "It kind of feels like it bottomed out around late November, early December." He later added that it feels like the ad market has "stabilized a bit" and that Comcast assumes it will stay weak for the first half of 2023 and then recover.

Distribution revenue increased 3.8%, reflecting an increase in subscribers at Peacock and contractual rate increases, partially offset by a decline in subscribers at Comcast's networks. Adjusted EBITDA decreased 81.7% to $132 million in the fourth quarter, reflecting higher operating expenses, which more than offset higher revenue.

"While we remain focused on managing costs, we expect underlying media EBITDA excluding Peacock to continue to be impacted by the top-line pressures at our linear networks," Cavanagh added.

In the studios segment, revenue jumped 13.1% to $2.7 billion for the quarter due to higher content licensing and theatrical revenue. Content licensing revenue increased 15.9%, while theatrical revenue increased 47.3%.

Comcast touted the successful performance of recent releases, including "Ticket to Paradise," "Puss in Boots: The Last Wish," "Violent Night" and "Halloween Ends." Adjusted EBITDA for the segment increased by $109 million to $160 million, reflecting higher revenue, which more than offset higher operating expenses.

In the theme parks segment, revenue rose 12% to $2.1 billion in the fourth quarter, primarily due to increased attendance and guest spending at its U.S. and Japan parks compared to the prior year period. Adjusted EBITDA for theme parks increased 16% to $782 million.

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