Strong gains from content licensing and retransmission consent revenue gave a big boost to NBCUniversal’s contribution to Comcast’s third quarter earnings.
Revenue at NBCUniversal climbed 8% for the quarter to $8.6 billion but earnings slipped 8.5% to $2.1 billion amid tough year-over-year comps for the film division and theme parks. Overall, Comcast beat analysts expectations with total revenue for the quarter of $22.1 billion, up 5% from the year-ago quarter, and adjusted earnings of $7.3 billion, up 2.5%.
Comcast last month sealed a deal to acquire the Euro satellite TV giant Sky. Comcast chairman-CEO Brian Roberts and Sky CEO Jeremy Darroch also outlined growth plans for Sky during a conference call with Wall Street analysts.
“This is an exciting and important time in Comcast’s history. To highlight a few of the achievements in our businesses this quarter, Comcast Cable’s EBITDA growth was the fastest in six years, and customer relationship growth accelerated, driven by the best broadband net additions for a third quarter in 10 years,” Roberts said. “At NBCUniversal, our TV businesses continued their strong performance. NBC finished the 52-week season ranked No. 1 in total viewers for the first time in 16 years and No. 1 in adults 18-49 for the fifth consecutive season, and is off to a great start in the new season. Our recently completed acquisition of Sky is transformative for our company, helping create a unique global leader in media, technology, television and broadband.”
Revenue at the NBC broadcast unit jumped 15.4% to $2.5 billion thanks to higher retrans fees and content licensing coin, a category that was up some 24.7% for the quarter. Retrans revenue spiked 21%. Adjusted earnings climbed 1.8% to $321 million, fueled by higher ratings including gains at Telemundo for its inaugural round of World Cup coverage this past summer.
NBCU’s cable programming unit delivered a 10.8% gain in revenue to $2.9 billion, with adjusted earnings growing 6.9% to $968 million. Advertising revenue for the cable group was up 4.2% for the quarter. Comcast noted that the rate of decline of subscribers for its cable channels was less than 1%, an improvement over the 1.5%-2% rate in recent quarters.
NBCUniversal CEO Steve Burke also noted that advertising sales have been very strong in the quarter, fueled in part by an uptick in political advertising as the Nov. 6 midterm elections approach.
“We’re having a very, very strong political season,” Burke said during the conference call. “It looks more like a presidential year than a midterm year.”
Filmed entertainment and theme parks had rougher quarters thanks in part to natural disasters forcing lengthy closures of the Universal park in Osaka, Japan and the high bar set at the box office by the performance last year of “Despicable Me” in the third quarter.
Total revenue in the film division was up 3.8% to $1.8 billion, and theatrical revenue climbed 16.7% thanks to “Jurassic World: Fallen Kingdom” and “Mamma Mia! Here We Go Again.” But Universal saw home entertainment revenue sink 13.1%, following last year’s release of “Boss Baby” and “The Fate of the Furious” in Q3. Overall, adjusted earnings plunged 44.2% to $214 million, reflecting higher operating costs.
Theme parks revenue slipped 1.4% to $1.5 billion. The hit came in part because of “severe weather and natural disasters” in Japan, Comcast said. Adjusted earnings fell 6.5% to $725 million.
On the cable systems side, Comcast saw a slower than expected rate of decline among its video subscribers, with net losses of 106,000.
Burke was pressed about the subscriber picture for NBCUniversal’s cable channels. He said the rate of growth from the upstart virtual MVPDs — including new services from Hulu, YouTube and DirecTV — appeared to be “flattening” in the quarter. He emphasized the health of NBCU’s content businesses and the company’s interest in using those programming engines to power new distribution platforms, as every major media company is considering these days.
“As the world pivots here toward more streaming we want to make sure we respect and nurture and continue to outperform on the television side and where wherever the world goes in terms of new technologies,” Burke said.