Comcast Has Hopes For Sports, Parks Reopening

The Summer Olympics in Japan to be broadcast on NBC and the NBCUniversal cable networks have already been rescheduled for 2021, but executives of NBCU owner Comcast remain optimistic that sports leagues in the U.S. and around the world will resume play at some point yet this year.

“We absolutely believe that sports will come back. And when they do, there’s bound to be so much excitement and enthusiasm, which may resonate even more than before, regardless as to whether or not stadiums are filled with fans. Bringing these stories to the world are what our sports teams do best,” said Comcast Chairman-CEO Brian Roberts in his company’s first quarter conference call Thursday with Wall Street analysts.

With people sheltering in place due to the COVID-19 outbreak that’s closed schools and many workplaces, video consumption at home is on the rise. “Great content is more valuable than ever, even while technology disrupts,” Roberts noted.

All of Comcast’s theme parks remain closed, and that’s a big financial drag, although Roberts insists that the theme park business is still a long-term winner. If all of the parks remain closed through the end of the current second quarter, the theme park division is expected to post an EBITDA loss of $500 million this quarter.

With so much attention on theme parks, sports and film release schedules, none of the analysts even asked a question about advertising pacings. During his prepared remarks, Comcast Sr. VP-CFO David Cavanaugh made it clear that second quarter ad revenues will be down sharply.

“Taking the television businesses together, advertising results at both cable networks and broadcast were impacted at the end of the first quarter due to the postponement of sports resulting from COVID-19,” Cavanaugh told analysts. “Looking ahead, we anticipate advertising revenue will materially weaken from the first quarter, due to the continued postponement of sports, as well as the shape of the economic recovery as it reopens from COVID-19 shutdowns.”

Broadcast TV (NBC, Telemundo, content licensing and the O&O stations) saw revenues increase in the first quarter by 8.8% to $2.68 billion. Content licensing shot up 31.3%, which was attributed to contract timing. Higher retransmission consent payments were a big contributor to a 6.9% gain in “distribution and other revenue,” the company said.

Broadcast TV ad revenues were flat with a year earlier, “reflecting higher pricing and local political advertising, offset by audience ratings declines and reduced advertising spending due to COVID-19,” Comcast said in its quarterly summary.

Cable networks ad revenues declined 2.2% in the first quarter. Subscriber revenue also declined, so overall revenues slipped 0.3% to $2.86 billion.

While broadcast TV EBITDA gained 29.6% to $501 million, the cable networks posted a 1.2% decline to $1.25 billion.

Advertising is a relatively small piece of the revenue pie for Comcast Cable, where first quarter revenues rose 4.5% to $14.9 billion. Cavanaugh reported that ad revenues were flat in the first quarter for Comcast Cable, but are expected to be down significantly in the second quarter.