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Comcast Delivers Revenue and Earnings Gains Despite Softness at NBCUniversal

Comcast matched Wall Street’s expectations for its third quarter revenue and beat on earnings per share despite tough year-over-year comparisons for NBCUniversal.

Comcast delivered $26.8 billion in revenue, up 21.2% from the year-ago quarter, and adjusted earnings per share of 79 cents, up 16.2% from Q3 2018. The consensus among analysts had adjusted EPS coming in at 75 cents per share. Net income climbed 11.5% to $3.2 billion, according to Q3 earnings released Thursday.

But it was a slower frame for NBCUniversal, which faced a high bar from the year-ago quarter when it had a revenue boost in its broadcasting unit from Telemundo’s coverage of soccer’s World Cup. Total revenue for NBCU slid 3.5% to $8.3 billion. Adjusted earnings before interest, taxes, depreciation and amortization inched up 1.6% to $2.1 billion.

NBCU’s cable networks also faced tough year-to-year comps with a 27.2% drop in content licensing revenue, contributing to a total revenue slide of 2.8% for cable networks to $2.8 billion. Adjusted EBITDA of $955 million was on par with the year-ago frame, thanks in part to lower programming and production costs in the quarter.

Broadcast TV revenue at the Peacock was down 9.1% to $2.2 billion but adjusted EBITDA was up 5.1% to $338 million. The unit saw a 12% drop in advertising revenue compared the year-ago quarter when Telemundo had the Spanish-language World Cup rights in the U.S., but at the same time it didn’t have to shell out such a big license fee so adjusted earnings improved. Retransmission consent revenue was a bright spot, growing 10% to nearly $500 million.

NBCU’s film operations had a soft quarter with a big drop in home entertainment revenue contributing to a 6.2% decline in total revenue to $1.7 billion. Adjusted EBITDA fell 8.7% to $195 million. The studio was up against a high bar from the box office performance in the comparable 2018 frame of “Jurassic World: Fallen Kingdom” and “Mamma Mia! Here We Go Again,” although the turnstile traction for “Fast and Furious Presents: Hobbs & Shaw” this year helped offset some of the slide.

Theme parks as ever was a reliable engine for NBCU, delivering a 6.8% increase in revenue to $1.6 billion and a 0.7% gain in adjusted EBITDA to $731 million.

On the cable systems side, Comcast saw a loss of 238,000 video customers but a gain of 379,000 high-speed Internet customers. Comcast’s video subscriber base stands at 21.4 million.

Sky, the U.K./Euro satcaster that Comcast acquired in a duel with Disney and Fox last year, saw a decrease of 99,000 in total customer relations, which leaves its subscriber base at 23.9 million. Total revenue, adjusted for currency fluctuations, was up 0.9% to $4.6 billion. A big year-over-year decrease in operating costs and expenses — $4.1 billion in Q3 2018 vs. $3.7 billion — led to a 46% gain (adjusted for currency fluctuations) in adjusted EBITDA to $899 million.

Sky’s subscriber decline was in contrast to an influx of 426,000 subscribers fueled by demand for “Game of Thrones” and “Chernobyl.” Comcast CFO Michael Cavanagh told Wall Street analysts during Comcast’s earnings conference cal  Sky expects to return to a net gain of subscribers in Q4.

Comcast chairman-CEO Brian Roberts emphasized in his remarks to analysts that Comcast’s $40 billion purchase of Sky last year is already paying off by making the company much more global than before. Broadband growth at Comcast Cable and a business services initiatives at Sky reflect the corporate effort to harness Comcast’s strength as a broadband provider.

The marriage of Comcast and Sky’s broadband and video platforms with streaming initiatives such as Flex — Comcast’s low-cost broadband bundle aimed at Internet-only consumers — and Sky and NBCUniversal’s sports and entertainment content “puts us in unique position to compete, including in the streaming market,” Roberts said.

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