Peacock, the streaming service of Comcast’s entertainment unit NBCUniversal, narrowed its third-quarter loss to $217 million compared with $436 million in the year-ago period. The streamer, which unveiled new programming like The Paper and M3GAN 2.0 in the quarter, ended September with 41 million paying subscribers, unchanged from the end of June, and also the end of March, and compared with 36 million a year ago, the company said Thursday.
Peacock revenue dropped slightly to $1.4 billion in the third quarter, compared with $1.5 billion in the year-ago period when the Paris Olympics boosted results. The loss on the adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) line of the earnings update was down from the year-ago period after the streamer had lost only $101 million in the second quarter.
Adjusted EBITDA for the company’s Media unit, to which Peacock belongs, increased 28 percent in the third quarter to $832 million as a 24 percent decline in operating expenses compared to when the Olympics period a year earlier more than offset a 20 percent revenue decrease to $6.59 billion. When excluding Olympics revenue from the year-ago period, revenue would have been up 4.2 percent. Media unit ad revenue fell 41 percent, but was up 2.6 percent when adjusted for the Olympics.
“The decrease in operating expenses was primarily due to lower sports programming costs associated with the Paris Olympics in the prior year period and a decrease in other sports programming costs for our domestic television networks, mainly reflecting lower sports volumes compared to the prior year period, partially offset by an increase in sports costs for our international networks,” the company said.
Revenue for the Studios unit increased 6 percent to $3 billion, “primarily due to higher content licensing revenue,” Comcast said.” Content licensing revenue increased primarily due to the timing of when content was made available by our television studios, partially offset by the timing of when content was made available by our film studios. Theatrical revenue increased primarily due to higher revenue from an increased number of releases in the current quarter, including the successful release of Jurassic World Rebirth.”
Adjusted EBITDA for the Studios segment dropped 22 percent to $365 million due to an 11.7 percent increase in operating expenses, which more than offset a 6 percent revenue gain. The increase in operating expenses was “primarily driven by higher programming and production expenses, mainly due to higher costs associated with content licensing sales, and higher marketing and promotion expenses due to increased spending on recent and upcoming theatrical film releases,” the company said.
Theme parks were a key growth driver of the latest period. Revenue jumped 18.7 percent to $2.71 billion “primarily due to higher revenue at domestic theme parks, driven by the successful opening of Epic Universe in May.” Adjusted EBITDA for theme parks rose 13 percent to $958 million, reflecting higher revenue, which more than offset a 22 percent increase in operating expenses, which was primarily due to operating costs associated with Epic Universe.
The planned Versant transaction, which will separate most of the conglomerate’s cable networks from the rest of its operations, cost Comcast money again in the three months ended Sept. 30. “Adjusted EBITDA excludes transaction and transaction-related costs associated with the proposed separation of Versant, as well as other operating and administrative expenses related to our investment portfolio,” the company disclosed. It listed $26 million in transaction costs, plus $90 million in transaction-related costs, for a total of $116 million in the third quarter. For the year to date, it recorded $277 million in such costs.
Comcast will retain NBCUniversal’s Peacock, the NBC broadcast network, the Bravo cable channel, and the studios in the separation, while the rest of the cable brands, along with such digital assets as Golf Now and Rotten Tomatoes, will form Versant.
Comcast is run by chairman and CEO Brian Roberts and president Michael Cavanagh, who will in the new year be elevated to the role of co-CEO.
In the core cable systems business, total domestic broadband customer net losses came to 104,000 in the latest quarter, total domestic wireless line net additions were 414,000 and total domestic video customer net losses hit 257,000.
“In Content & Experiences, we’re building momentum across NBC and Peacock as we head into one of the most exciting stretches of live sports in our history, including robust NBA coverage, which just began last week,” Roberts said. “The early success of Epic Universe contributed to 19 percent revenue growth at our theme parks, reflecting the strength of our newest attractions and the enduring appeal of the Universal brand.”
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