Comcast’s Peacock Is Bright Spot for Company Hit by Cord Cutting

NBCUniversal’s Peacock signed up 10 million customers in its first three months, making the new streaming service a rare bright spot at Comcast Corp.’s pandemic-ravaged entertainment division.

Comcast disclosed the initial results while reporting its second-quarter earnings on Thursday. NBC has said it hopes Peacock will reach 30 million to 35 million active users by 2024. The service, which is free and supported by advertising, made its debut to Comcast subscribers in April and expanded nationwide on July 15.

While it’s early, exclusive and original titles have been among the top draws on the fledgling service, said Matt Strauss, chairman of Peacock and NBCUniversal Digital Enterprises. The No. 2 series is “Brave New World,” adapted from the novel by Aldous Huxley, and the top movie is “Psych 2,” based on the USA Network comedy-drama show. The most-watched series is “Yellowstone,” a Paramount Network drama starring Kevin Costner.

Peacock will have exclusive streaming rights to “The Office” in January. The long-running NBC series, a former streaming megahit on Netflix Inc., will relaunch with previously unreleased content.

New Structure

With Comcast’s core cable division losing hundreds of thousands of TV subscribers, company executives said they would soon announce a new structure for the business focused on streaming. They didn’t give any details. The transition will be “uncomfortable” but necessary to give customers “more flexibility to do and see what they want,” Chief Executive Officer Brian Roberts said on a call with analysts.

While Peacock is Comcast’s flagship streaming service, it’s still unavailable through Roku Inc. and Inc.’s Fire TV, the most popular connected-TV platforms.

AT&T Inc.’s HBO Max, which aims to have 50 million subscribers within five years, has 4.1 million activations so far, the company said last week. It also isn’t available on Roku and Fire.

While consumers have been testing out Peacock, NBCUniversal’s theme-park, TV and film businesses have struggled during the pandemic. The unit’s quarterly revenue declined 25% last quarter to $6.1 billion, Comcast said Thursday.

NBCUniversal reached a landmark deal with AMC Entertainment Holdings Inc. earlier this week to cut exclusive theater runs for new movies to 17 days. It’s a “minimum” window and a new model that the company would like to take to other theater partners and other countries, NBCUniversal CEO Jeff Shell said on the earnings call Thursday. If a movie is having a good run, it will stay in theaters longer, Shell said.

Parks Suffering

The company’s theme parks have been hit particularly hard by the virus, recording a loss of nearly $400 million in the quarter. Universal’s theme park in Florida reopened in June but attendance has been thin due to concerns about the coronavirus.

Comcast’s internet business, however, continues to hum along as people rely on broadband connections for entertainment as well as working and learning from home. Comcast added 323,000 internet customers in the quarter, up 54% from a year ago.

That number didn’t include more than 600,000 customers who got internet free or got a break on paying their monthly bills through programs aimed at helping keep people connected during the pandemic. AT&T and Verizon Communications Inc. last week similarly reported swaths of nonpaying customers.

What Bloomberg Intelligence Says

“The loss of over 1.5 million video subscribers in 2Q at Comcast, AT&T and Verizon shows the continued pressure on the pay-TV bundle. While the return of live sports in 2H could offer some relief, the economic toll of Covid-19 and steady increases in the prices of pay-TV packages will keep cord-cutting levels elevated, in our view.”

--Geetha Ranganathan, media analyst

Click here to read the research.

Comcast’s total quarterly revenue of $23.7 billion and adjusted profit of 69 cents a share both surpassed analysts’ estimates, and the company maintained its dividend. Its shares were down 0.7% to $43.58 at 3:36 p.m. in New York.

Comcast’s Peacock Is Bright Spot for Company Hit by Cord Cutting

The company lost 477,000 video subscribers in the quarter, more than double the losses from the same period a year ago. Comcast has raised TV prices and expressed little interest in keeping cost-conscious customers.

The video losses could also be a sign that more people cut the cord because some major sports weren’t playing during the quarter, or because they lost income during a pandemic that’s led to high unemployment.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.