Comcast Q3 Reaction: No News Is Bad News for Peacock

After showing solid signs of recovery in Q2, Comcast’s businesses maintained their momentum through the last quarter. Comcast reported total revenue rose nearly 19% year-over-year in Q3, but the stock fell more than 3% at market open as the company provided even less transparency on user engagement for its streaming service Peacock. 

CEO Brian Roberts said on the earnings call that the company is focused on creating long-term shareholder value. The media giant reported net debt of $82.3 billion in Q3 compared with $89.3 billion in the same period last year and free cash flow of $3.2 billion. 

Things improved across most of Comcast’s businesses in the last quarter, with the exception of modestly slowing growth in broadband. Most notably, the theme parks that had been struggling through the past 18 months saw a meaningful bounceback. Management noted that in Q3, Universal Orlando had the most profitable quarter in its history even without international contribution. It’s important to remember that theme parks are a substantial driver of free cash flow. 

Overall NBCUniversal revenue rose 58% in Q3, to $10 billion. NBCUniversal reported Peacock revenue of $230 million but adjusted losses of $520 million in Q3. And for the first time since Peacock’s launch, the company did not reveal any user engagement figures for the streaming service in Q3.  

When asked by an analyst on the call, NBCUniversal chief Jeff Shell merely said things like, “Everything in Peacock is heading in the right direction ... All metrics are pointing up ... Usage continues to be great.” 

Previously, Comcast reported “sign-ups” for Peacock, a figure that already offered very little transparency. The lack of even that was concerning, and many would likely assume management didn’t brag about subscriber numbers because there was nothing to really brag about. Last we heard, Peacock had 54 million sign-ups in the U.S as of the end of Q2. 

And what makes this lack of information even more troubling was the Tokyo Olympics probably didn’t contribute as much to subscriptions as previously anticipated. In a piece VIP published in September, exclusive data from Apptopia showed the Olympics boosted downloads for Peacock’s mobile app only temporarily. 

It’s worth remembering that the launch of Peacock in July 2020 was timed to align with the original air date for the Tokyo Olympics, before COVID-19 postponed the event by a year. 

This, then, begs the question, just how far behind is Peacock relative to its peers Netflix, Disney+ and a slew of others? Just a couple of weeks ago, Netflix reported that it added another 4.4 million global paid subscribers, and the other major streaming player in the game, Disney+, is set to report results Nov. 10. 

In the old world, debt reduction, buying back stock and strong core business performance would without a doubt drive the stock higher, but Comcast stock’s reaction Thursday made it very clear that yet again investors are more worried about growth and less so about fundamentals. With pay-TV continuing to shrink, streaming is the future, but there’s still a lot of catching up to do for Peacock, and the stock’s underperformance this year reflects it.  

The issue then is how much more cash will Comcast invest in Peacock all the while asking for investor patience. All we learned was that Roberts and the company promised “long-term shareholder value,” but just how much longer can investors wait?