Comcast Sees Advertising Making Comeback
Despite the economic impact of COVID-19, the Broadcast Television division of Comcast Corp. (NBC, Telemundo, TV Studios and the O&Os) managed to post a 20% improvement in adjusted EBITDA for the second quarter, rising to $641 million. That was attributed to decreased operating costs—including reduced sports fees as most events were delayed or cancelled—and higher retrans revenues.
Also, content licensing revenues were up 58.5%, including internal transactions with the newly-launched Peacock steaming service. In all, TV revenues were down only 1.6% to $2.36 billion, despite a 27.9% drop in advertising to $959 million.
“While the advertising market was hit hard, it is coming back more rapidly than we anticipated and the upfront is now in full-swing,” said Jeff Shell, CEO, NBCUniversal, in Comcast’s second quarter conference call with Wall Street analysts. He didn’t provide any specific details on what to expect for ad sales in the current quarter.
Shell anticipates that production of TV shows will resume by the end of summer. That, along with the return of live sports, with give NBCU fresh content for its various platforms this fall.
Look for NBCU to soon announce a restructuring of its executive structure for its cable/broadcast networks and streaming operations. The pandemic has accelerated changes in behavior, says Shell, “and this is particularly true in the television business, where viewership is rapidly shifting from linear to nonlinear.” Noting that Mark Lazarus was named chairman, NBCUniversal Television and Streaming in May 2020, Shell told analysts that Lazarus is finalizing a new structure “that will demonstrate the unique way we plan to manage this business going forward.”
Earlier in the call, Comcast Chairman-CEO Brian Roberts had declared that “we are leaning into streaming.” Peacock is already exceeding expectations, with more than 10 million signups. The new advertising-supported streaming service is now seen as benefitting from the delay of the Summer Olympics to 2021, followed just a few months later by the 2022 Winter Olympic.
“It’s a total bummer for our company that we don’t have the Olympics right now,” Shell said in response to an analyst’s question. But he called it a “bit of a silver lining” for Peacock, and promised “innovative and cool things” when NBCU adds Peacock to its multiplatform Olympics coverage.
As expected, the Theme Parks unit of NBCU was hardest hit by the pandemic. Second quarter revenues plunged 94.1% to a mere $87 million, with parks in the U.S. and Japan closed for most of the period. The parks in Japan and Orlando, Fla., reopened in June with limited capacity and new sanitation protocols, while the Hollywood, Calif., park remains closed. “The road back will be gradual and bumpy,” Shell said of the Theme Park business.