Strong results from NBCUniversal’s Studios business and growth in Peacock helped Comcast beat Wall Street expectations for its first quarter of 2023. The cable and media conglomerate reported net income of $3.8 billion Thursday, or earnings per share of 91 cents, compared with $3.55 billion, or 78 cents per share a year earlier. On an adjusted basis, earnings per share came in at 92 cents.
Revenue fell 4% year over year to $29.7 billion, while adjusted earnings before interest, taxes, depreciation and amortization grew 3% year over year to $9.42 billion.
Analysts expected the NBCUniversal parent to report earnings of 82 cents per share on revenue of $29.4 billion. Comcast shares climbed over 3% in pre-market trading on Wednesday following the earnings announcement.
Peacock added 2 million net paid subscribers during the quarter for a total of 22 million subscribers, up 60% year over year but representing slower growth than in the fourth quarter, when it added 5 million subscribers. The streamer saw revenue climb 45% year over year to $685 million but posted an adjusted EBITDA loss of $704 million, compared to $472 million of revenue and an adjusted EBITDA loss of $456 million in the prior year period. Executives still expect Peacock’s losses to peak at around $3 billion in 2023, they reaffirmed on a call following the release of earnings.
In its Connectivity & Platforms segment, adjusted EBITDA grew 3.2% year over year to $8.09 billion and revenue declined 1.8% year over year to $20.2 billion. Residential connectivity and platforms revenue fell 2.6% year over year to $17.87 billion, while business services connectivity revenue climbed 5.1% year over year to $2.28 billion.
Total customer relationships for the cable business increased by 82,000 to 52.5 million. Total domestic connectivity customers increased by 5,000 to 32.3 million, total domestic wireless lines increased by 355,000 to 5.67 million and total domestic video customer decreased by 614,000 to 15.5 million. Significantly, video accounted for less than half of Comcast’s customer relationships in the quarter.
In its Content & Experiences segment, adjusted EBITDA fell 1% year over year to $1.6 billion and revenue fell 9.5% year over year to $10.26 billion. Media revenue dropped 20.7% year over year to $6.15 billion, primarily due to lower domestic advertising revenue and domestic distribution revenue, reflecting the comparison to the Beijing Olympics and the NFL’s Super Bowl in the prior year period.
Domestic advertising revenue fell 38.8% year over year to $2.03 billion, domestic distribution revenue fell 7.8% year over year to $2.71 billion and international networks revenue rose 1.3% year over year to $1.01 billion. Excluding the incremental revenue from the Olympics and Super Bowl, domestic advertising revenue decreased 6.1% and distribution revenue increased 3.8%. Adjusted EBITDA in the Media division fell 25.5% year over year to $880 million.
In its Studios segment, adjusted EBITDA climbed 13.3% year over year to $277 million, while revenue rose 1.7% year over year to $2.96 billion. Theatrical revenue soared 90.1% year over year to $319 million, reflecting the successful performance of recent releases including “Puss in Boots: The Last Wish” and “M3GAN,” while content licensing revenue fell 3.5% year over year to $2.34 billion, driven by the timing of when content was made available by the company’s film and television studios.
The latest quarterly results come just days after former NBCUniversal CEO Jeff Shell was terminated with cause on Sunday. Comcast investigated allegations that he engaged in inappropriate conduct with a female employee, later identified as Hadley Gamble. Gamble, a CNBC anchor and senior international correspondent, filed a complaint alleging sexual harassment, her lawyer said.
Comcast chairman Brian Roberts called Shell’s ousting a “tough moment” but added that the company is “fortunate to have a fabulous and tenured leadership team at NBC Universal.” Comcast president Mike Cavanagh will serve as Shell’s permanent replacement while retaining his current title, an insider confirmed to TheWrap.
“Mike is a fantastic executive and operator many of you know well and he’ll work closely with each of the management team at NBCUniversal to continue our excellent momentum,” Roberts said. Cavanagh and Chief Financial Officer Jason Armstrong will lead Comcast’s earnings calls going forward.
“While it’s unfortunate to have an unexpected change in leadership, I would tell you there is no reason for anyone to think we’re going to be revisiting our strategy as a result of that all by itself. We will obviously react as the environment changes around us,” Cavanagh said.
He emphasized that his priority taking over Shell’s duties is to “just settle things down and make sure the businesses and the business leaders and NBCU remain focused on the job at hand.”
“Into the first several days of this, that’s well underway, and I frankly don’t think the business is going to miss a beat,” he added.
The media conglomerate is set to deliver presentations at NewFronts next week and traditional broadcast upfronts on May 15 in New York City.