Comcast Q1 Review: Both a Safety and Reopening Trade

Comcast Q1 Review: Both Safety and
Cheyne Gateley/VIP

Comcast shut down the haters who doubted whether the company would be able to keep up the strong momentum in its ever-important broadband business in Q1.  

The media giant’s core Cable business added 461,000 broadband subscribers and lost 491,000 cable subscribers, but it still managed to rake in a whopping $15.8 billion during the quarter. Comcast shares opened Thursday’s trading session 3% higher on the announcement. 

Not to mention Comcast’s wireless business posted a record quarter of new customer additions and broke even for the first time ever. It was the highlight of the company’s first-quarter results and offset the damages to its media unit, NBCUniversal. 

NBCUniversal continued to struggle in the first three months of the year. While signs of a slow recovery were present, Theme Parks revenue fell 33% from last year to just $619 million, and Studios revenue dipped 0.6%, to $2.4 billion.  

Peacock, which was being closely watched by investors, added 9 million sign-ups and now boasts 42 million total domestic sign-ups. Comcast attributed some of Peacock’s growth to “The Office” and its recent exclusive deal with the WWE Network. 

But to clarify yet again, “sign-ups” does not equal paid subscribers. There is still no clarity on how many people are paying for the service and how much money Comcast is making from users. All we know is Monthly Active Accounts (MAA), which illustrates how many households use Peacock monthly, were about a third of the 42 million sign-ups, or about 14 million accounts. 

Peacock doesn’t make money yet and is still a long way away from offsetting the losses in revenue caused by cord-cutting. In Q1, Peacock saw about $700 million in pretax losses, and the losses are expected to continue to mount through the rest of this year. NBCUniversal estimated about $2 billion in losses over this year and last.  

To be fair, Peacock can’t be directly compared to its peers like Disney+ and Netflix, being it is mostly an ad-based service even though it does have an additional premium offering.  

As a result, a major bull case ahead for Peacock is the upcoming Olympics. Though there was little mention of the highly anticipated event on the earnings call, both Tokyo and Beijing are largely expected to take place as planned later this year and in 2022, respectively. And if they do, it will be a huge catalyst for NBCUniversal and Peacock, not only in terms of subscription growth but for ad revenue.  

There are only positive expectations ahead for Comcast. Many expect further fiscal stimulus to give a boost to businesses providing connectivity, and Comcast is one of the biggest players who stand to benefit from the potential subsidies.  

And Theme Parks and Studios are just getting started. Though the parks represent only about 6% of revenue, it’s a business that generates free cash flow and strengthens the balance sheet. With reopening going as planned in the U.S., a stronger recovery is likely in the second half. Similarly, production is ramping back up, and while it won’t be a sudden snap-back, content generation will pick up steadily. 

Comcast’s results Thursday prove it is not only a safety trade but a reopening trade. Its broadband business provides safety and security to its investors, while its NBCUniversal segment is expected to see a boom when reopening takes full effect. 

And the company’s shares reflect those sentiments. So far in 2021, Comcast is comfortably outperforming its peers. The stock jumped 10% this year, while AT&T gained 6%, Disney rose 3.5% and Netflix sank 3% during the same time period.