The overall news from Comcast’s Q2 financials was about losses led by drops in their theme park and film units, but those losses not being quite as bad as the analyst consensus expected. One particularly significant aspect on the sports media front is what happened with their streaming service, Peaco*ck.
As per Lucas Manfredi of The Wrap, that service posted year-over-year revenue growth and narrowed its financial loss, but still lost a ton of subscribers:
Peaco*ck narrowed its loss to $348 million and grew its revenue to $1 billion, compared to a loss of $651 million and revenue of $820 million in the year ago period, but shed 50o,000 subscribers during the quarter despite a 38% year over year increase.
The Peaco*ck dimension here is going to be interesting to watch, as it’s a crucial part of Comcast-owned NBCUniversal’s coverage plans for the 2024 Paris Olympics. All events will be streamed live on Peaco*ck this time around. The service will also offer full-event replays and a bunch of other features, including a highlights show with Kenan Thompson and Kevin Hart, Gold Zone whip-around coverage, watch parties with Alex Cooper ofCall Her Daddy, and even an AI version of Al Michaels calling some highlights.
But, around that, the Peaco*ck price is also going up. That price is set to rise by $2 for each of the ad-supported and ad-free options, to $7.99 and $13.99 a month respectively, with that increase kicking in as of July 18 for new customers and as of Aug. 17 for existing customers. And so that adds to the discussion about number of subscribers; Peaco*ck certainly will see some growth from people signing up for the Olympics, and the price increases will mean they’ll get more money per customer from that, but it will be interesting to see how those signups do at this higher price point, and how long people keep their subscriptions afterward.
The length of subscription kept is a notable thing here. And it’s a recent conversation around Peaco*ck, given the streamer’s exclusive Kansas City Chiefs-Miami Dolphins NFL playoff game this year (and all the consternation that drew). NBCU cited an average of 23 million people streaming the game there, but that number included local market viewing as well. Comcast president Mike Cavanaugh said on their last earnings call it brought in a “tremendous number of subs ahead of where we expected it to be,” but didn’t provide any further details, leaving the signups and stick-around estimates to outside firms like Antenna (which estimated 2.8 million signups just for that and a retention rate of 71 percent through at least the end of February, both of which have been questioned).
Around that, some of the 500,000 lost subscribers here are possibly people who signed up for that playoff game, stuck around for a bit, and then left. And it should be noted that the overall trend for Peaco*ck recently has been positive, with 3 million subscribers added in Q1. (Specifically how many of those were about the NFL and how many were about other things, such as the addition of Oscars darling Oppenheimer, remains up for debate.) The boosted revenue (which partly comes from a 38 percent rise in paid Peaco*ck subscribers) and lowered losses are also useful for them and are getting the service closer to a point where it’s sustainable. But it’s still notable to see the scale of Q2 subscriber loss here.
It’s worth looking at the overall Comcast picture as well. As Manfredi writes, the bigger direct impacts on their financials in Q2 were from drops at their theme parks and movie studios:
The Studios division saw a 51.4% year over year drop in adjusted EBITDA to $124 million and 27% drop in revenue to $2.25 billion, while the theme parks business saw adjusted EBITDA decline 24% to $632 million and revenue decline 10.6% to $1.98 billion.
Revenue for the Studios division fell primarily due to a 74% drop in theatrical revenue to $237 million, due to tougher comparisons compared to last year when “The Super Mario Bros. Movie” and “Fast X” were released, and a 5.9% drop in content licensing revenue to $1.7 billion, due to the timing of when content was made available by the company’s television studios.
Meanwhile, theme parks revenue decreased primarily due to lower revenue and guest attendance at its domestic theme parks, as well as the negative impact of foreign currency at its international theme parks.
Beyond that, Comcast lost 120,000 broadband customers in the quarter (beating an expectation of 142,000) and 419,000 cable TV customers (beating a projection of 502,000). But the studios and theme park losses were the biggest deal here. And that led to their stock being at $37.85 as of noon Eastern Monday, down from a market open number of $39.43, but up from an 11 a.m. number of $37.01. The overarching Comcast discussion at the moment is mostly “the Q2 numbers were rough, but not as rough as many expected.”
But Q3 is going to be a bigger deal still for Comcast and Peaco*ck. First, there’s the aforementioned Olympics, and it will be interesting to see how they do there in both linear TV and Peaco*ck (especially after the Peaco*ck price hike). Beyond that, they’re gearing up for the start of the NFL, which will include another Peaco*ck-exclusive game in Week 1 from Brazil (Green Bay Packers-Philadelphia Eagles). They also have their second season of Big Ten games, and the first with that conference’s new additions of USC, UCLA, Oregon, and Washington.
And while it’s still a year from kicking in (and thus won’t directly impact any Q3 data), Comcast’s NBA rights deal looks to be getting more and more official with the news that Warner Bros. Discovery is trying to match Amazon’s package rather than theirs. And Cavanaugh cited Peaco*ck as a huge part of their NBA and WNBA strategy going forward on Tuesday’s earnings call. So forward-looking analysts and investors certainly will be pondering how those incoming rights will impact the streaming service and its parent company.
There are a lot of things to keep in mind with Comcast and Peaco*ck going forward. Comcast has the advantage of being a giant and diversified company, so while Peaco*ck is an important piece for them, it’s far from the only piece. On the actual media side, they own the broadcast network NBC and a plethora of cable channels as well, and they also sell cable bundles, internet packages, and mobile phone packages. And then there are areas like their theme parks and movie studios, all of which can have impacts on the overall business (as seen in these Q2 numbers).
But Peaco*ck is growing more and more in importance within Comcast. And that’s seen with the emphasis they’re putting on it in particular sports deals like the Olympics, the NFL, the Big Ten, and (soon) the NBA. Along those lines, the Q2 subscriber losses aren’t great, even if they don’t come close to removing the Q1 gains. And we’ll see where the subscriber numbers go in Q3, around both the Olympic content and the price increase.
[The Wrap]
