Olympics To Be Profitable For NBCU

Despite the impact of COVID-19 restrictions on the current Tokyo Olympics, NBCUniversal CEO Jeff Shell told analysts on parent company Comcast’s quarterly conference call Thursday morning that NBCU is still on track to have a profitable Olympics.

“It’s impossible to [overstate] the importance of the Olympics to NBCUniversal. It’s not really financially, it’s more operationally across the company. We have 4,000 people literally working on it,” Shell said, recounting how he and Comcast Chairman-CEO Brian Roberts visited the Tokyo operation and marveled at the depth of expertise in the team involved on site and back in the U.S.

“Of course, the Olympics are the perfect opportunity to show the strength of our platform, not only at NBCUniversal, but Comcast and Xfinity and Sky,” Shell told the analysts.

So, while he acknowledged an analyst’s suggestion that the Olympics has had some bad luck — “and there was a drumbeat of negativity,” as Shell put it — delayed a year and no spectators due to the pandemic — and TV ratings “being less than we expected,” he pointed to digital strength as the upside.

“So, net-net, with all this bad luck, we’re going to be profitable on the Olympics, which we’re very happy with. We’re very happy with the product. If you watch every night, you’ll see that we use this as a firehose to promote everything else that we’re doing at the company,” he said.

Shell emphasized that the new Peacock streaming platform has been an important addition to NBC’s Olympics coverage and a learning experience. “What we’ve learned in this Olympics, we will take to Beijing and change the product, change the offering in each Olympics going forward, and we’re really excited about that,” he said.

Comcast executives were thrilled with the quarter’s results across all segments. The Theme Parks returned to profitability, modestly, led by the Florida operation. Broadband additions were through the roof, as the business segment accelerated along with consumer demand. Advertising soared, with Comcast Cable advertising up 57% and the much larger NBCU ad pie growing by a third.

“Advertising revenue increased 33%, reflecting the timing of sports, an overall market recovery compared to last year, and the launch of Peacock,” Comcast Corp. CFO Mike Cavanagh told the analysts.

“We had significantly more sporting events compared to last year, when sports were paused, which benefitted our advertising revenue. Excluding this benefit, advertising grew at mid-teens levels. Distribution revenue increased 19%, or high single digits, excluding the RSN [regional sports networks] fee adjustments that impacted last year’s results,” he explained.

The CFO said Media EBITDA declined 16% to $1.4 billion, including Peacock. He noted that the still-young streaming service generated revenue of $122 million and an EBITDA loss of $363 million. “Excluding Peacock, Media EBITDA would be essentially flat, driven by higher sports costs, associated with the increase in sporting events this quarter, compared to both last year and 2019,” Cavanagh said.

Noting recent press speculation about whether NBCU has sufficient scale to compete in the streaming world, CEO Roberts insisted that “We have all of the parts.”

Shell claimed that there are three elements to scale. He said Comcast has the necessary technology with its Xfinity and Sky platforms. It also has a strong brand in Peacock, which is about to add 20 million European households through Sky,

“Then the most important part of scale for streaming is content. And we are really at the beginning of our content rollout at Peacock,” said Shell, noting the additions during the second quarter. Moving forward, he noted another Olympics, new movies coming directly to Peacock and eventually the content currently on Hulu.