Comcast media gains offset broadband pressure before planned split

Comcast reported second-quarter revenue of $29.94 billion, down 1.2% from a year earlier, while adjusted earnings of $1.04 a share exceeded the 97-cent estimate compiled by LSEG. The results showed a widening gap between NBCUniversal’s media operations, where revenue rose strongly, and Comcast’s broadband-led connectivity business, where customer losses and lower pricing weighed on sales.

Comcast shares were about 1.5% higher in premarket trading Thursday after the release.

The company’s content and experiences division, which includes NBCUniversal’s television, film and theme parks businesses, generated $10.73 billion in revenue, up almost 23% from the same period last year, according to Comcast. The performance came as the company prepares to separate its media and broadband businesses into two publicly traded companies.

Peacock reaches profitability

Comcast said Peacock, NBCUniversal’s streaming service, was profitable in the quarter for the first time since its 2020 launch. The platform benefited from live sports programming, including the FIFA World Cup and the NBA postseason, and added subscribers during the period, the company said.

Streaming profitability is closely watched across the media sector because services such as Peacock require large outlays for programming, technology and marketing before subscription and advertising revenue can cover costs. In Comcast’s case, the quarter also brought higher advertising revenue in the TV media unit, supported in part by World Cup coverage that began in mid-June and aired in Spanish in the U.S. on Telemundo.

Film studio revenue rose 25%, Comcast said. Theme parks revenue increased nearly 3%, with gains in Orlando partly offset by weaker results at international parks.

Connectivity segment contracts

The connectivity and platforms division, which includes Xfinity broadband, mobile and cable television, posted revenue of $19.8 billion, a 3% decline from a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization for the segment fell nearly 6% to $7.96 billion.

Comcast lost 167,000 residential broadband customers in the quarter and shed 280,000 cable television subscribers, according to the company. Broadband has faced sustained pressure from fixed wireless services offered by 5G providers and other alternatives, while the traditional cable television bundle has continued to lose customers.

The company said its revised broadband strategy is gaining traction. That approach relies in part on mobile and broadband offers, including lower-priced plans and promotions. Those offers can help retain or attract households, but they also put pressure on reported revenue while they are being rolled out.

Mobile remained a growth area for Comcast. The company said additions set another quarterly record and lifted its total mobile base to 10.2 million lines.

Split frames investor focus

Comcast announced earlier this year that it would separate the media and broadband businesses into two publicly traded companies. In Thursday’s release, co-chief executives Brian Roberts and Mike Cavanagh said the separation was “an important step toward creating two focused companies with the financial strength and flexibility to pursue their respective growth strategies.”

On a pro-forma basis, adjusting for the Versant spinoff completed at the start of the year, Comcast said second-quarter revenue increased 4.7%. The company’s reported figures, however, underline the different pressures facing its two main business lines: media was lifted by sports, advertising and film growth, while connectivity continued to absorb broadband and pay-TV subscriber declines.

This story draws on original reporting from CNBC.