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NBCU Reports Lower Fourth-Quarter Earnings

NBCUnversal’s fourth-quarter profits fell as revenue declined 2.6% because of a drop in its filmed entertainment business, according to an earnings report by parent company Comcast.

Overall Comcast reported higher profits and revenue as its high-speed internet business grew and it lost a small number of video customers, although video losses are expected to grow in 2020.

NBCU earnings before interest, taxes, depreciation and amortization (EBITDA) were down 4.7% to $2.02 billion.

Revenue was down 2.6% to $9.15 billion.

Earnings for NBC’s broadcast business increased 14.2% to $471 million. Revenue increased 2.1% to $3.2 billion. Distribution revenue rose 9.9% because of higher retransmission payments. Advertising revenue was down 1.5%. Excluding political spending, advertising revenue was up in the low-single digit range reflecting higher prices, the company said.

EBITDA at NBCU’s cable networks was down 1.4% to 1 billion as costs increased. Revenue increased 1.2% to $2.9 billion as advertising and content licencing grew. Ad revenue was up 2%. Distribution revenue was flat as fee increases were offset by a decline in subscribers.

NBCU’s Filmed Entertainment unit reported a 48.9% drop in EBITDA to $91 million. Revenues fell 21% to $1.6 billion compared to last year, when the company released The Grinch and Halloween.

As a whole, Comcast reported a big increase in earnings in the fourth quarter.

Net income jumped 25.9% to $3.16 billion, or 68 cents a share, from $2.51 billion, or 55 cents a share. Adjusted earnings per share were 79 cents.

Revenue rose 2% to $28.4 billion.

Comcast announced a 10% increase in its dividend to 92 cents per share per year.

The financial results were higher than Wall Street forecasts.

Comcast’s cable business increased EBITDA by 5.4% to $5.88 billion as revenue rose 2.6% to $14.8 billion.

Revenue from video was down 1.2% to $5.5 billion while revenue from high-speed internet rose 8.8% to $4.8 billion.

Total customer relationships increased by 372,000 to 31.5 million during the quarter, with residential relationships up by 352,000. The company added 442,00 high-speed internet customers but lost 149,000 video customers. 

"With the rate adjustments that we are implementing in 2020, as well as the ongoing changes in consumer behavior, we expect higher video subscriber losses this year," said Comcast CFO Mike Cavanagh on the company's earnings call with analysts.

Video is still valuable for us to attach to our broadband centric customer relationships, but only to the extent that it helps us increase the lifetime value of those relationships," Cavanagh said. "We've consistently said that there is a segment of the market that either doesn't value a traditional pay-TV service or isn't profitable for us to serve. We're not chasing the segment of the market and we saw fewer new connects with these customers."

Ad revenue fell 19.1% to $699 million, compared to last year’s election year.

"We delivered strong operational and financial results in the fourth quarter, capping another great year for Comcast, including double-digit growth in full-year adjusted EPS, record free cash flow and 1.4 million broadband net additions in the U.S. Our teams at Cable,” said Comcast CEO Brian Roberts.

“NBCUniversal and Sky continued to execute at a high level, strengthening our leadership position in our markets,” Roberts said. “Looking ahead, in 2020 we are leaning into exciting opportunities, including: further differentiating our broadband product in the U.S. through innovations like Flex and xFi Advanced Security; accelerating the deployment of Sky Q; launching a new broadband service in Italy; debuting Super Nintendo World at Universal Studios Japan; and introducing a world-class streaming service - Peacock - which leverages capabilities from across Comcast. Underscoring our confidence in the continued success of our company, we are pleased to announce a 10% increase in our dividend, our 12th consecutive annual increase."