Industry Insider: Comcast’s Second Earnings Call
On July 23, 2024 Comcast hosted their Second Quarter Earnings Call on their website where they held a session with corporate executives Marci Ryvicker (Executive Vice President, Investor Relations), Michael Cavanagh (President), Jason Armstrong (CFO), and other important financial figures. An earnings call is a quarterly conference call hosted by a public company, such as Comcast, during which its executives discuss the company's financial performance, business developments, and future outlook with investors.
Comcast Corporation is an American media conglomerate known for operating one of the largest broadcast and cable networks by revenue. While the name Comcast is not easily recognizable, its holding of the cable service Xfinity, its content ownership of NBCUniversal and Universal, and its operation of the streaming service Peacock make it a foreboding figure in the entertainment sphere. They show this strength in the second earnings call.
Michael Cavanagh, President of Comcast Corporation, opens the call by laying out three key elements from the quarter:
Broadband
Parks
NBA
These three simple words, according to Cavanagh, define the revenue and success of the quarter. First, broadband can be defined as the high-speed internet access that Comcast provides; an individual's broadband services can range from various tiers of internet services such as browsing the internet to gaming or streaming a television series. Commenting on these services Cavanagh states, “In the second quarter, [average revenue per user] grew 3.6% … [and] despite the competitiveness of the recent past, we’ve maintained a market-leading base of 32 million broadband customers…”
While Cavanagh boasted of this impressive lead, he failed to discuss market competitiveness and shifting technology further. They lost 120,000 broadband subscribers in the second quarter of 2024. Additionally, it is no secret that streaming services are becoming the preferable mode of television, thus consumers are not investing in the Comcast Corporation and Peacock and are opting for more popular streaming media conglomerates. Comcast still leads the charge in broadband revenue, but is their reign slowly coming to an end?
Moving away from broadband, the media executives further delve into the three key elements of the second quarter – the second being parks. For this section of the meeting, Cavanagh was not afraid to confront the lackluster performance: “… where are results were down in both revenue and [earnings before interest, taxes, depreciation, and amortization] when compared to the to last year’s record performance with two-thirds of the decline driven by lower attendance at our domestic parks.” They list what they believed altered their performance this quarter and the 2024 year. The first being what they called “a COVID recovery pull forward…” Meaning, that immediately after the pandemic there was a surge in tourism because of the tight lockdown and precautions, and now, the numbers have evened out. Second, the executives believe that they are light in domestic park guests due to new and upcoming projects.
Although a lower attendance rate at their parks than the previous year is certainly not ideal for the company, there isn’t too much to worry about on this front. The end of the pandemic is a clear indicator that the surge in visitors in 2023 was abnormal and that attendance rates were likely to even out. And their new projects will certainly attract visitors. It was announced that a new theme park, Epic Universe, is being opened in 2025, which gained a lot of attention and support on social media.
Finally, Cavanagh discusses the NBA: “Our expectation is that soon a 11-year rights deal between ourselves and the NBA will be announced… This package, which begins with the 2025-2026 season, include, 100 NBA games each regular season across NBC and Peacock…” This deal represents a major shift in the streaming world: the access to live streaming. Companies, such as Comcast Corporation, are seeing their consumers move away from cable television and want to get ahead of the game. Although live sports is what is arguably keeping cable television alive and is still reporting high numbers, Comcast can play both fields and keep its consumers. The NBA represents the many sports that Comcast is moving to streaming.
Ultimately, Comcast Corporation continues to demonstrate financial foresight. Despite some challenges, such as the loss of broadband subscribers and decreased park attendance, the company remains a dominant player in the broadband market, with 32 million subscribers and a growing average revenue per user. Additionally, upcoming projects like the Epic Universe theme park and the NBA streaming deal position Comcast for future growth and success. With these initiatives, Comcast is well-poised to capitalize on evolving consumer preferences and maintain its stronghold in the entertainment and telecommunications industries.
