Comcast Reports 2nd Quarter 2019 Results

PHILADELPHIA–(BUSINESS WIRE)–Comcast Corporation (NASDAQ: CMCSA) today reported results for the quarter ended June 30, 2019, including Cable Communications, NBCUniversal and Sky.

Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation, said, “I am very pleased with our terrific second quarter results and the continued, successful execution of our strategy. Each of our businesses demonstrated healthy growth in adjusted EBITDA, contributing to a double-digit increase in adjusted earnings per share. Our company’s consistent, profitable growth is fueled by our leading scale in direct customer relationships and premier content. We now have nearly 55 million high-value direct customer relationships, including the 456,000 net additions in the second quarter, and a vast library of intellectual property and new productions that are extremely popular across generations and geographies. Our teams throughout the company continue to collaborate to make themselves and each other even stronger, and I’m excited about our growth opportunities ahead.”

Consolidated 2nd Quarter 2019 Highlights:

• Consolidated Adjusted EBITDA Increased 17.5%
• Earnings per Share Increased 13.0% to $0.78, on an Adjusted Basis
• Generated Free Cash Flow of $4.2 Billion

Cable Communications 2nd Quarter 2019 Highlights:

• Cable Communications Adjusted EBITDA Increased 7.4% and Adjusted EBITDA per Customer Relationship Increased 3.8%
• Total Customer Relationships Increased 3.4% Year-Over-Year to 30.9 Million, Including Net Additions of 152,000 in the Quarter
• High-Speed Internet Residential Revenue Increased 9.4%; Business Services Revenue Increased 9.8%; Total High-Speed Internet Customers Increased by 209,000

NBCUniversal 2nd Quarter 2019 Highlights:

• NBCUniversal Adjusted EBITDA Increased 8.1%
• Cable Networks and Broadcast Television Adjusted EBITDA Collectively Increased 9.0%
• NBCUniversal Successfully Completed Another Record Upfront, Highlighted by Overall Volume Up 10% to Nearly $7 Billion and a Double-Digit Price Increase at NBC Prime

Sky 2nd Quarter 2019 Highlights:

• Sky Adjusted EBITDA Increased 13.4% on a Pro Forma Basis; Excluding the Impact of Currency, Adjusted EBITDA Increased 19.9% on a Pro Forma Basis
• Total Customer Relationships Increased 4.4% Year-Over-Year to 24.0 Million, Including Net Additions of 304,000 in the Quarter, a 197,000 Improvement from the Second Quarter of 2018

Consolidated Financial Results

The comparability of our consolidated results was impacted by the fourth quarter 2018 Sky transaction. Sky’s results of operations are included in our consolidated financial statements following the acquisition date.

Consolidated Revenue for the second quarter of 2019 increased 23.6% to $26.9 billion. Consolidated Net Income Attributable to Comcast decreased 2.8% to $3.1 billion. Consolidated Adjusted EBITDA increased 17.5% to $8.7 billion.

For the six months ended June 30, 2019, consolidated revenue increased 20.6% to $53.7 billion compared to 2018. Consolidated net income attributable to Comcast increased 5.4% to $6.7 billion. Consolidated Adjusted EBITDA increased 17.8% to $17.3 billion.

Earnings per Share (EPS) for the second quarter of 2019 was $0.68, a decrease of 1.4% compared to the second quarter of 2018. On an adjusted basis, EPS increased 13.0% to $0.78 (see Table 5).

For the six months ended June 30, 2019, EPS was $1.45, a 6.6% increase compared to the prior year. On an adjusted basis, EPS increased 15.8% to $1.54 (see Table 5).

Capital Expenditures increased 0.6% to $2.3 billion in the second quarter of 2019. Cable Communications’ capital expenditures decreased 9.8% to $1.6 billion. NBCUniversal’s capital expenditures increased 2.7% to $473 million. Sky had capital expenditures of $177 million.

For the six months ended June 30, 2019, capital expenditures increased 3.1% to $4.4 billion compared to 2018. Cable Communications’ capital expenditures decreased 14.5% to $3.0 billion. NBCUniversal’s capital expenditures increased 26.9% to $926 million. Sky had capital expenditures of $436 million.

Net Cash Provided by Operating Activities was $7.0 billion in the second quarter of 2019. Free Cash Flow was $4.2 billion (see Table 4).

For the six months ended June 30, 2019, net cash provided by operating activities was $14.3 billion. Free cash flow was $8.8 billion (see Table 4).

Dividends paid during the second quarter of 2019 totaled $954 million.

Consolidated Pro Forma Financial Results

Pro forma results are presented as if the Sky transaction occurred on January 1, 2017. The pro forma amounts are based on historical results of operations and are primarily adjusted for the allocation of purchase price and excluding costs directly related to the transaction. These amounts are not necessarily indicative of what our results would have been had we operated Sky since January 1, 2017, (see Table 7 for reconciliations of pro forma financial data).

Consolidated Pro Forma Revenue for the second quarter of 2019 increased 0.8% to $26.9 billion. Consolidated Pro Forma Adjusted EBITDA increased 7.6% to $8.7 billion.

For the six months ended June 30, 2019, consolidated pro forma revenue decreased 1.3% to $53.7 billion compared to 2018. Consolidated Pro Forma Adjusted EBITDA increased 7.0% to $17.3 billion.

Cable Communications

Revenue for Cable Communications increased 3.9% to $14.5 billion in the second quarter of 2019, driven primarily by increases in high-speed internet, business services and wireless revenue. High-speed internet revenue increased 9.4%, driven by an increase in the number of residential high-speed internet customers and rate adjustments. Business services revenue increased 9.8%, due to increases in the number of customers receiving our services and rate adjustments. Wireless revenue increased 21.0%, reflecting an increase in the number of customer lines, partially offset by lower device sales as more customers bring their own device. Other revenue increased 6.0%, primarily due to increases in revenue from our security and automation services. Advertising revenue decreased 8.7%, primarily reflecting a decrease in political advertising revenue. Excluding political advertising revenue, advertising revenue decreased 2.5%. Video revenue decreased 0.6%, reflecting a decrease in the number of residential video customers, partially offset by rate adjustments. Voice revenue decreased 1.1%, primarily due to a decrease in the number of residential voice customers.

For the six months ended June 30, 2019, Cable revenue increased 4.0% to $28.7 billion compared to 2018, driven by growth in high-speed internet, business services, wireless and other revenue, partially offset by a decrease in advertising, video and voice revenue.

Total Customer Relationships increased by 152,000 to 30.9 million in the second quarter of 2019. Residential customer relationships increased by 123,000 and business customer relationships increased by 29,000. At the end of the second quarter, 66.6% of our residential customers received at least two Xfinity products. Total high-speed internet customer net additions were 209,000, total video customer net losses were 224,000, total voice customer net losses were 65,000 and total security and automation customer net additions were 23,000. In addition, Cable Communications added 181,000 wireless lines in the quarter.

Adjusted EBITDA for Cable Communications increased 7.4% to $5.9 billion in the second quarter of 2019, reflecting higher revenue, partially offset by a 1.6% increase in operating expenses. Non-programming expenses increased 1.4%, reflecting higher technical and product support expenses, advertising, marketing and promotion costs and other operating costs, partially offset by decreases in customer service expenses and franchise and other regulatory fees. Non-programming expenses per customer relationship declined 2.0% in the second quarter of 2019. Programming costs increased 1.8%, reflecting normal escalators in programming contracts, partially offset by video subscriber losses. This quarter’s Adjusted EBITDA per customer relationship increased 3.8%, and Adjusted EBITDA margin was 40.5% compared to 39.2% in the second quarter of 2018. Cable Communications results include a loss of $88 million from our wireless business, compared to a loss of $185 million in the prior period.

For the six months ended June 30, 2019, Cable Adjusted EBITDA increased 8.6% to $11.6 billion compared to 2018, driven by higher revenue, partially offset by a 1.2% increase in operating expenses. The higher expenses were due to a 2.3% increase in programming costs and a 0.4% increase in non-programming expenses. For the six months ended June 30, 2019, Adjusted EBITDA per customer relationship increased 4.9%, and Adjusted EBITDA margin was 40.3% compared to 38.6% in 2018. Cable Communications results include a loss of $191 million from our wireless business, compared to a loss of $374 million in the prior period.

Capital Expenditures for Cable Communications decreased 9.8% to $1.6 billion in the second quarter of 2019, reflecting decreased investment in scalable infrastructure and line extensions, partially offset by increased investment in support capital. Cable capital expenditures represented 11.0% of Cable revenue in the second quarter of 2019 compared to 12.7% in last year’s second quarter.

For the six months ended June 30, 2019, Cable capital expenditures decreased 14.5% to $3.0 billion, primarily reflecting decreased investment in scalable infrastructure and a lower level of spending on customer premise equipment. Cable capital expenditures represented 10.3% of Cable revenue compared to 12.5% in 2018.

NBCUniversal

Revenue for NBCUniversal decreased 0.8% to $8.2 billion in the second quarter of 2019. Adjusted EBITDA increased 8.1% to $2.3 billion, reflecting increases at Broadcast Television, Filmed Entertainment, Cable Networks and Theme Parks.

For the six months ended June 30, 2019, NBCUniversal revenue decreased 7.0% to $16.5 billion compared to last year’s results, which included an incremental $1.6 billion of revenue generated by the broadcasts of the 2018 PyeongChang Olympics and the NFL’s Super Bowl LII at our TV Businesses. Adjusted EBITDA increased 5.4% to $4.7 billion, reflecting increases at Filmed Entertainment, Cable Networks and Theme Parks.

Cable Networks

Cable Networks revenue increased 2.5% to $2.9 billion in the second quarter of 2019, reflecting higher distribution and content licensing and other revenue. Distribution revenue increased 3.4%, primarily due to contractual rate increases and the timing of contract renewals, partially offset by a decline in subscribers. Content licensing and other revenue increased 5.1%, due to the timing of content provided under licensing agreements. Advertising revenue was consistent with the prior year period, reflecting higher rates, offset by audience ratings declines. Adjusted EBITDA increased 2.2% to $1.2 billion in the second quarter of 2019, reflecting higher revenue, partially offset by higher programming and production costs.

For the six months ended June 30, 2019, revenue from the Cable Networks segment decreased 3.6% to $5.8 billion compared to 2018, reflecting lower advertising, distribution and content licensing and other revenue. Excluding $378 million of revenue generated by the broadcast of the 2018 PyeongChang Olympics in the first quarter of 2018, Cable Networks revenue increased 2.9% (see Table 6). Adjusted EBITDA increased 1.4% to $2.5 billion compared to 2018, reflecting lower revenue, more than offset by lower operating costs and expenses, including programming and production costs, due to the broadcast of the 2018 PyeongChang Olympics in the first quarter of 2018.

Broadcast Television

Broadcast Television revenue increased 0.5% to $2.4 billion in the second quarter of 2019, reflecting increased distribution and other revenue, partially offset by a decrease in advertising and content licensing revenue. Distribution and other revenue increased 14.7%, primarily due to higher retransmission consent fees. Advertising revenue decreased 4.2%, primarily due to the absence of revenue generated by Telemundo’s broadcast of the 2018 FIFA World Cup Russia^TM. Excluding this event, advertising revenue increased mid-single-digits, reflecting higher pricing, partially offset by audience ratings declines. Content licensing revenue decreased 1.7%, reflecting the timing of content provided under licensing agreements. Adjusted EBITDA increased 28.3% to $534 million in the second quarter of 2019, primarily reflecting a decrease in programming and production costs, due to Telemundo’s broadcast of the 2018 FIFA World Cup Russia^TM.

For the six months ended June 30, 2019, revenue from the Broadcast Television segment decreased 17.3% to $4.9 billion compared to 2018, primarily reflecting a decrease in advertising revenue. Excluding $770 million of revenue generated by the broadcast of the 2018 PyeongChang Olympics in the first quarter of 2018 and $423 million of revenue generated by the broadcast of the NFL’s Super Bowl LII in the first quarter of 2018, Broadcast Television revenue increased 3.7% compared to 2018 (see Table 6). Adjusted EBITDA decreased 0.3% to $921 million compared to 2018, with lower revenue offset by a decrease in programming and production costs, primarily due to decreased sports programming costs associated with the broadcasts of the 2018 PyeongChang Olympics and the NFL’s Super Bowl LII in the first quarter of 2018.

Filmed Entertainment

Filmed Entertainment revenue decreased 14.8% to $1.5 billion in the second quarter of 2019, primarily due to lower theatrical revenue. Theatrical revenue decreased 53.1%, reflecting the strength of releases in last year’s second quarter, including Jurassic World: Fallen Kingdom, partially offset by the performance of The Secret Life of Pets 2 in this year’s second quarter. Content licensing revenue increased 9.8%, driven by the timing of when content was made available under licensing agreements. Adjusted EBITDA increased by 33.0% to $183 million in the second quarter of 2019, reflecting lower revenue more than offset by lower programming and production costs.

For the six months ended June 30, 2019, revenue from the Filmed Entertainment segment decreased 3.9% to $3.2 billion compared to 2018, reflecting lower theatrical and other revenue, partially offset by higher content licensing and home entertainment revenue. Adjusted EBITDA increased 60.3% to $547 million compared to 2018, reflecting lower revenue more than offset by lower operating expenses.

Theme Parks

Theme Parks revenue increased 7.5% to $1.5 billion in the second quarter of 2019, primarily due to higher attendance, aided by the timing of spring holidays, and increases in guest spending. Adjusted EBITDA increased 3.8% to $590 million in the second quarter of 2019, reflecting an increase in revenue, partially offset by higher operating expenses, including costs to support new attractions, including Hagrid’s Magical Creatures Motorbike Adventure^TM in Orlando.

For the six months ended June 30, 2019, revenue from the Theme Parks segment increased 3.7% to $2.7 billion compared to 2018, primarily due to increases in attendance. Adjusted EBITDA increased 2.2% to $1.1 billion compared to 2018, reflecting an increase in revenue, partially offset by higher operating expenses.

Headquarters, Other and Eliminations

NBCUniversal Headquarters, Other and Eliminations include overhead and eliminations among the NBCUniversal businesses. For the quarter ended June 30, 2019, NBCUniversal Headquarters, Other and Eliminations Adjusted EBITDA loss was $184 million, compared to a loss of $150 million in the second quarter of 2018.

For the six months ended June 30, 2019, NBCUniversal Headquarters, Other and Eliminations adjusted EBITDA loss was $358 million compared to a loss of $338 million in 2018.

Sky

Pro forma results are presented as if the Sky transaction occurred on January 1, 2017. The pro forma amounts are based on historical results of operations and are primarily adjusted for the allocation of purchase price and excluding costs directly related to the transaction. These amounts are not necessarily indicative of what our results would have been had we operated Sky since January 1, 2017, (see Table 7 for reconciliations of pro forma financial data).

Pro Forma Revenue for Sky decreased 3.3% to $4.8 billion in the second quarter of 2019. Excluding the impact of currency, revenue increased 2.4%, primarily driven by higher content and direct-to-consumer revenue, partially offset by lower advertising revenue. Content revenue increased 27.7% to $376 million, reflecting the wholesaling of sports programming, including exclusive sports rights recently acquired in Italy and Germany, as well as monetization of our slate of original programming. Direct-to-consumer revenue increased 1.7% to $3.9 billion, driven by increases in video, mobile and broadband customers, partially offset by a decrease in average revenue per customer relationship. Advertising revenue decreased 5.6% to $563 million, reflecting overall market weakness.

For the six months ended June 30, 2019, pro forma Sky revenue decreased 4.1% to $9.6 billion compared to 2018. Excluding the impact of currency, revenue increased 2.1%, reflecting growth in content and direct-to-consumer revenue, partially offset by lower advertising revenue.

Pro Forma Total Customer Relationships increased by 304,000 to 24.0 million in the second quarter of 2019, which includes an increase in net video customer additions as a result of unique content launches.

Pro Forma Adjusted EBITDA for Sky increased 13.4% to $772 million in the second quarter of 2019. Excluding the impact of currency, Adjusted EBITDA increased 19.9%, reflecting higher revenue and lower operating expenses. The lower operating expenses were primarily due to the inclusion of contract termination costs and costs related to a settlement in last year’s second quarter, partially offset by higher programming expenses primarily driven by new contracts for Serie A and UEFA Champions League soccer rights in Italy and Germany.

Contacts

Investor Contacts:

Jason Armstrong (215) 286-7972

Jane Kearns (215) 286-4794

Press Contacts:

D’Arcy Rudnay (215) 286-8582

John Demming (215) 286-8011

Read full story here