Comcast loses 521K cable video subscribers in Q2

Comcast’s cable TV losses stacked up for another quarter in a row, dropping 521,000 net video subscribers. On the NBCUniversal side of the business, Peacock paid streaming subscribers stayed flat in the period at around 13 million.  

Overall, Comcast said it was a strong quarter with consolidated revenue growth of 5.1% to around $30 billion and Adjusted EBITDA increase of 10% to $9.8 billion.

However, its pay TV business is not one of the growth drivers. In the period Comcast reported video residential net losses of 497,000, along with video business services losses of 23,000. It’s slightly worse than Q1 losses and compares to Q2 2021 losses of 399,000. Comcast’s residential video base now stands around 16.5 million, compared to 18.2 million at the end of Q2 2021. It’s video penetration of homes and businesses passed shrunk to 28.1% versus 31.5% penetration in the year ago quarter.

Alongside subscriber declines video revenues were down 2.4% to $5.4 billion, with customer net losses, partially offset by 7% growth in average revenue per user (ARPU) as the operator raised prices earlier this year. Total cable revenues were up 3.7% to $16.6 billion driven by growth in broadband, business services, wireless and advertising.

Advertising revenue in the cable unit of $748 million, up 10.2%, was mainly fueled by political revenue and growth in its advanced advertising unit FreeWheel, as well as free ad-supported streaming TV service Xumo. Specially, CFO Michael Cavanagh said Xumo contributed about 20% of advertising growth in the quarter.

Xumo is now part of a joint venture with Charter as part of plans to develop and license a streaming platform, so starting in Q3 the FAST wont’ be reported in Comcast’s cable results.

Despite large video losses, Comcast executives spent almost no time on the earnings call talking about its legacy TV business.

Peacock subscribers flat but service helps fuel NBCU media growth  

As for its streaming service Peacock, the platform didn’t have a huge quarter in terms of subscriber growth. Brian Roberts, chairman and CEO of Comcast, said the company was pleased with the relatively flat performance that was in-line with expectations, given the ebbs and flows of the streaming services content slate.

Peacock ended the period with around 13 million paid U.S. subscribers, the same it disclosed at the end of Q1. Monthly active accounts actually ticked down from 28 million in Q1 to 27 million in Q2.

It follows the first quarter when Peacock added 4 million subscribers, with the first three months were bolstered by big events like the Olympics and the Super Bowl.

Still, Comcast is looking forward to “a very strong fall” for Peacock, Roberts said, as NBC next-day broadcast content will shift from Hulu to Peacock as its exclusive home.

Peacock will also be able to take advantage of its pay-one film release window with movies like “Jurassic World: Dominion” and “Minions: The Rise of Gru,” alongside the start of Sunday Night Football, Premiere League programming, the World Cup, and more originals.

According to Roberts, NBCU is very happy with its new film windowing for theatrical releases including PVOD and accelerated pay-one availability on Peacock.

“For Peacock, early access to premium Universal films is a proven driver of subscriber acquisition and engagement,” Roberts said in opening remarks.

While subscribers were flat, Peacock helped drive growth in NBCU’s media segment in Q2.

Q2 revenues for NBCUniversal, which includes media, studios and theme parks, were up 18.7% year over year to $9.45 billion. Streaming service Peacock helped fuel media revenue growth of 3.6% to $5.3 billion. In the quarter Peacock recorded revenue of $444 million – more than 3.5 times higher compared to last year. Peacock had an Adjusted EBITDA loss of $467 million.

Peacock also bolstered distribution revenue in the media segment, which grew 8.4% to $2.7 billion, driven by increases in paid subscribers versus a year ago, along with growth in networks. Advertising revenue declined 1.3% to $2.2 billion because of linear rating declines and a difficult 2021 comparison.

On the advertising side NBCU reiterated its highest grossing Upfront season in the company’s history with $7 billion in commitments, including $1 billion for Peacock.

AVOD growth validates Peacock business model

Asked on the earnings call whether the growth of AVOD services coming to market is a positive or negative for Peacock, executives weren’t concerned about greater competition for advertising dollars.

Peacock has offered a lower-cost tier with ads from the get-go, a model more streaming services (including SVOD leaders such as Netflix and Disney+) plan to implement on their own platforms.

“We had the benefit of studying the market before we came in and we think we picked the right business strategy,” said NBCUniversal CEO Jeff Shell, adding it’s an extension of its existing business rather than new on dual model of subscription and ad revenue.  “I think everybody kind of moving that direction is a validation of that business model.”

As far as advertising in general, both linear and on Peacock, Shell pointed out that the company is one of the biggest advertisers out there.

“So people coming in at the levels they’re coming in, we don’t expect it to have any material impact on what we sell and how we do it,” he continued. If anything “our scale gives us an increasing advantage.”

The company is also expecting a pretty strong political season on the advertising front, Shell noted.

Broadly, Shell said the company is uniquely positioned, and now with Peacock, “to take advantage of whatever a candidate wants to advertise and where.”

“We expect some pretty strong results from Peacock in the coming fall in addition to the advertising across our company,” he added.