Peacock Sheds 500,000 Subscribers, Comcast Earnings Dragged Down by Revenue Drop at Studios and Parks

Comcast shares fell over 5% on Tuesday after the company posted mixed results for its second quarter of 2024, dragged down by its Studios and Theme Parks businesses.

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. On an earnings call Tuesday morning, Comcast president Mike Cavanagh attributed to the decline to “a COVID recovery pull-forward of a magnitude we hadn’t previously appreciated,” noting that domestic theme parks were the “early beneficiaries” of rebounds in tourism in 2022 and 2023 after the pandemic.

Additionally, Peacock 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.

Ahead of the Olympics starting Friday, the streamer raised the price of its Premium and Premium Plus tiers by $2 to $7.99 and $13.99 per month, respectively. The hike went into effect on July 18 for new customers and will impact existing customers starting Aug. 17.

Cavanagh also touted NBC’s recently finalized 11-year media rights agreement with the NBA , which he said would expand the company’s reach across broadcast and streaming.

Here are the top-line results:

Adjusted net income: $4.38 billion, up 0.2% year over year

Adjusted earnings per share : $1.21 per share, compared to $1.11 per share expected by analysts surveyed by Zacks Investment Research.

Adjusted EBITDA: $10.17 billion, down 0.7% year over year.

Revenue : $26.69 billion, compared to $30.07 billion expected by analysts surveyed by Zacks Investment Research.

Peacock Subscribers: A loss of 500,000 paid subscribers during the quarter for a total of 33 million, but a 38% increase compared to the prior year period

Total media revenue grew 2.1% to $6.3 billion and adjusted EBITDA grew 9% to $1.36 billion. The revenue bump was due to a 5.7% increase in domestic distribution revenue to $2.76 billion and 6.5% increase in international networks revenue to $1.1 billion, partially offset by a 1.7% decline in domestic advertising revenue to $1.99 billion.

Domestic distribution revenue grew primarily due to higher revenue at Peacock, while international networks revenue grew due to an increase associated with the distribution of sports networks. Domestic advertising revenue decreased primarily due to lower revenue at the company’s networks, offset by Peacock’s revenue growth.

Comcast continued to bleed pay TV customers, losing 419,000 for a total of 14.99 million. It also shed 120,000 broadband customers, including 110,000 residential customers. But its mobile business was a bright spot, adding 322,000 domestic wireless lines for a total of 7.2 million.

Total residential connectivity and platforms revenue fell 1.5% to $17.82 billion, due to the loss of cable customers, offset by a 3% uptick in domestic broadband revenue to $6.57 billion due to price increases and 17.3% jump in domestic wireless revenue to $1.02 billion due to the increase in customer lines.

Elsewhere, Comcast generated free cash flow of $1.3 billion, down 60.9% year over year, including a tax payment related to the sale of its minority stake in Hulu to Disney and other tax related matters. It also returned $3.4 billion in capital to shareholders through $1.2 billion in dividend payments and $2.2 billion in share repurchases. The company ended the quarter with $4.7 billion in net cash from operating activities, down 34.4% year over year.

Looking ahead, the company anticipates “modest” growth in overall media EBITDA, but noted that the degree of year over year improvement would vary based on timing of sports entertainment launches and marketing beginning in the third quarter. As a result, the company warned that EBIDTA growth in the studios division would be skewed to the fourth quarter of the year.

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