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Comcast posts dramatic drop in Q1 profit, despite cable and broadband bumps amid coronavirus stay-at-home


Brian Roberts, chairman and chief executive officer of Comcast Corp.

Scott Eells | Bloomberg | Getty Images

Comcast reported a nearly 40% drop in first-quarter profit on Thursday, despite significant bumps in its cable and broadband divisions as coronavirus restrictions kept customers at home. The company reported headwinds in its film and theme park divisions, and warned of more pressure to come as global lockdowns and economic downturns pressure profits. 

Shares of Comcast rose roughly 1.8% in premarket trading. 

Here’s how the company did:

  • EPS: 71 cents, adjusted
  • Revenue: $26.61 billion

Wall Street was anticipating earnings per share of 68 cents on revenue of $26.75 billion, based on Refinitiv consensus estimates. However, it’s difficult to compare reported earnings to analyst estimates for Comcast’s first quarter, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.

Comcast posted $2.1 billion in net income for the first quarter. That’s roughly 40% lower than the first quarter last year when Comcast earned more than $3.5 billion. Adjusted for one-time items, net income came in at $3.3 billion, a 6% dip year over year.

Still, the company saw a boost from its cable and broadband divisions as the coronavirus pandemic kept U.S. households mostly inside. Cable revenue jumped 4.5% year over year, helped by a 52% surge specifically in wireless revenue.

An 8.8% jump in broadcast TV revenue also helped to offset headwinds in other segments that felt particular impacts of the Covid-19 outbreak.

“While parts of our business have been more impacted by COVID-19 than others, we have continued to innovate. We are distributing our content in new ways, as evidenced by the recent launch of Peacock on X1 and Flex,” CEO Brian Roberts said in a release. 

Covid-19 headwinds

Comcast’s filmed entertainment revenue fell 22.5% year over year, bringing in $1.4 billion in total revenue, and theme park revenue fell 31.9%, hurt by park closures and accounting for just $869 million in total revenue. The company temporarily shut down its Universal theme parks, which brought in $1.56 billion in total revenue last quarter.

Universal also delayed some of its movies, including “Fast and Furious,” a potential blockbuster that was originally scheduled to premiere in May. But Universal has also had some success with new movies. This month, it released “Troll World Tour” through various streaming and on-demand services as a digital rental instead of in theaters. The company said this week the movie generated $100 million in revenue so far.

The company also took a hit to advertising revenue, which analysts have warned could take a toll on global scale.

Ad revenue fell 2.2% during the quarter, “reflecting audience ratings declines and reduced advertiser spending resulting from the postponement of sports events due to COVID-19, partially offset by higher pricing,” the company said. 

Global sporting events were paused or canceled during the quarter in an effort to reduce the spread of the virus, essentially halting live sports programming. The 2020 Olympics in Tokyo, for example, were postponed to 2021, which could put pressure on Comcast’s annual revenue, as its NBCUniversal division is the sole provider of broadcast rights for the games.

The company said Sky, the British broadcaster it acquired in 2018, saw a revenue decrease of 5.8% to $4.5 billion in the first quarter of 2020. Comcast cited lower direct-to-consumer revenue, advertising revenue and content revenue.

Sky saw its customer relationships decrease by 65,000 to 23.9 million in the quarter, which the company said is due to the postponement of sports events and the suspension of certain sales channels due to the coronavirus.

Comcast’s overall total customer relationships is up 2.6%, however, adding 371,000 customers during the quarter.

The company warned of more pressure to come in the second quarter as global lockdowns drag on a U.S. economic downturn threatens spending. 

“Our Cable Communications results, while strong in the first quarter 2020, will be negatively affected in the second quarter by the significant deterioration in domestic economic conditions in recent weeks and by the costs associated with our support of customer connectivity as the population increasingly works and learns remotely from home,” the company said in a release. “NBCUniversal and Sky results also will be negatively impacted to a greater extent in the second quarter 2020. As a result, we expect the impacts of COVID-19 to increase in significance in the second quarter 2020 and to have a material adverse impact on our consolidated results of operations over the near-to-medium term.”

This is breaking news. Please check back for updates. 

Disclosure: Comcast owns NBCUniversal, parent company of CNBC.

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