In a recent financial report by Comcast, released yesterday (Thursday), it was revealed that the media conglomerate surpassed analyst expectations in terms of earnings for Q1 2023. The growth can be attributed to broadband services despite slowing customer acquisition rates across cable providers due to high interest rates and increased competition from wireless companies such as T-Mobile and Verizon, particularly with regards to home internet connections. Comcast’s stock price has decreased by approximately 6% in response to these findings.
In Q1 of this year, net income for the company rose by 0.6%, totalling $3.86bn ($97c a share) compared to $3.83bn ($91c a share), which was recorded during the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 0.6% in Q1 of this year, reaching approximately $9.4bn.
Comcast’s revenue also grew during the first quarter compared to figures recorded a year prior: up from $28.75bn to $30.06bn ($30.06 per share). This growth was largely driven by domestic broadband customers, with rates increasing despite Comcast losing 65k of its customer base throughout Q1 2023 (similarly reflecting declines reported among peers like AT&T and Charter).
While company President Mike Cavanagh attributed this intensifying level of market competition to the current climate being “extremely competitive”, particularly for ‘cost-conscious customers’, he acknowledged that these pressures may continue well into the near future. The forthcoming end of the federal government’s Affordable Connectivity Program (ACP), which offers a $30 discount on broadband services, is expected to take effect in April this year.
During Q1 2023, Comcast reported an increase in wireless customers by approximately 695k, bringing the total number of lines up to 7m ($48.2 per share). However, cable TV customer numbers continued their downward trend: dropping from 14.6m last quarter (-59k) to currently standing at -0.498% (a loss of 487k customers during Q1 this year).
Comcast’s theme parks saw a decline in adjusted EBITDA, falling by approximately $233m ($632m), with an increase in operating expenses including higher marketing and promotion costs as well as the negative effect of foreign currency. Comcast CFO Jason Armstrong explained that attendance at its Orlando-based park “felt some pressure” during Q1 2023, largely due to being ‘in between’ new attractions for consumers – despite claiming longstanding growth potential and confidence about future opportunities in this area moving forward.
The company also reported a decline in earnings from the media business (which includes NBCUniversal) as well as studios during Q1 2023, with revenue rising by just over $1bn ($10.37 per share). Comcast executives still highlighted Peacock – the newly expanded home to the film adaptation ‘Wicked’, starring Cate Blanchett and Ariana Grande (which is set for release in December 2024) as a standout performer, with three million new paid subscribers during Q1 this year. This brings its total customer base up to approximately 34m – though it was acknowledged that losses relating specifically to Peacock continue weighing on the segment (to the tune of $639m). However, Comcast expects these losses associated with Peacock to begin narrowing in upcoming quarters as subscriber growth accelerates and ‘real pricing power’ materialises.
Disclosure: Comcast is NBCUniversal’s parent company while CNBC is owned by both organisations within the same portfolio.
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