Peacock Success Helping Offset Ad Slump, Comcast Says
Linear network revenue is down, but Comcast is offsetting that via Peacock subscription and advertising growth, Chief Financial Officer Jason Armstrong said as the company announced its Q2 results Thursday. He said Comcast is reallocating some linear network resources to the streaming service. The ad market is likely to remain soft in the second half of the year, Comcast President Mike Cavanagh said. Advertising revenue for the quarter was $993 million, down 10.7% from the same quarter in 2022, Comcast said.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Domestic advertising was down 5% in the quarter, partially offset by Peacock advertising, up 75%, Armstrong said. He said Comcast expects similar ad results in Q3. Peacock ended Q2 with 24 million subscribers, vs. 13 million a year ago, and added two million alone in Q2, he said, partly due to the company starting in June to move Comcast bundled subscribers who got Peacock for free to paid Peacock subscribers. He said Peacock subscriber growth should continue through the rest of the year due to those transitioning efforts and the draw of Peacock-exclusive content.
Comcast ended Q2 with 29.8 million U.S. residential broadband customers, down 30,000 from last year. Asked about a return to broadband subscriber growth, Comcast Cable President Dave Watson said challenges include lower activity of people moving and increased broadband competition. "Fixed wireless is still pressing," he said. He said long term the company will return to customer growth but nearer term its focus is on network upgrades, with it starting DOCSIS 4.0 deployments by year's end. He said it offers 2 Gbps service across more than 25% of its footprint. He said Comcast "will press aggressively" with mobile service. Asked about the durability of its mobile virtual network operator agreement with Verizon, Watson said it's a "great" agreement that gives Comcast perpetual access to mobile services needed from Verizon's network.
There are some signs fixed wireless competition might moderate, MoffettNathanson's Craig Moffett wrote investors Thursday, with Verizon this week reporting flat sequential fixed wireless additions for a second consecutive quarter and their guidance calling for slowing growth over coming years. Comcast's very slight decline in broadband subs "looks for all the world like the slowing-to-zero-ish soft landing that the bulls have hoped for rather than the falling-through-zero free-fall that the bears have predicted," he said.
The company ended the quarter with 15 million U.S. video subs, down from 17.1 million last year, and 6 million U.S. wireless lines, up from 4.6 million. Revenue for the quarter was $30.5 billion, up 1.7% year over year.
Comcast is "actively engaged" in state and federal lobbying as broadband equity, access and deployment rules are being developed for participation, Watson said. Assuming the participation framework is "satisfactory," Comcast is "going to be full participants with bidding," he said. The company is already active in expanding its network before BEAD activity, with a million homes to be passed this year through edge-outs. He said BEAD-financed network expansion is likely in 2025 and 2026.
Cavanagh said Comcast is committed to "a fair deal as soon as possible" with striking writers' and actors' unions. He said the company will likely move some working capital from 2023 to 2024 due to content production delays from the strikes. He said speculation about Comcast getting ESPN in some kind of property swap with Disney was "very improbable," but Comcast might look at trying to pick up NBA sports rights when they become available.