Comcast's (CMCSA) Q3 Earnings Beat, Internet User Base Rises

Comcast CMCSA reported third-quarter 2020 adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate by 27.5% but decreasing 17.7% year over year.

Consolidated revenues slid 4.8% year over year to $25.53 billion, but beat the Zacks Consensus Estimate by 3.2%.

Cable Communication Revenue Details

Revenues increased 2.9% from the year-ago quarter to $15 billion. Total Customer Relationships increased 556K to 32.7 million.

High-speed Internet revenues grew 10.1% year over year to $5.2 billion, primarily driven by increased residential high-speed Internet customers and average rate. Total high-speed Internet customer net additions were 633K.

Business Services revenues were up 4% to $2.05 billion, driven by customer-base expansion and higher average rates.

Wireless revenues jumped 22.8% to $400 million, supported by an increase in the number of customer lines. Comcast added 187K wireless lines in the reported quarter.

Advertising revenues increased 11.8% year over year to $674 million, primarily driven by an increase in political advertising revenues.

Voice revenues were $876 million, down 9% year over year due to a declining number of residential voice customers.

Video revenues slipped 2.1% to $5.42 billion, reflecting a decline in the residential video customer count.

Total video customer net losses were 273K while total voice customer net losses were 3K.

Other revenues decreased 17.2% from the year-ago quarter to $382 million, owing to lower security and automation services revenues as well as waived late fees.

NBCUniversal Revenues Decrease Y/Y

Revenues declined 18.9% year over year to $6.72 billion.

Cable Networks’ revenues dipped 1.3% from the year-ago quarter to $2.74 billion.

Broadcast Television revenues increased 8.3% from the year-ago quarter to $2.41 billion.

Filmed Entertainment revenues decreased 25% from the year-ago quarter to $1.28 billion. Theatrical revenues fell 94.7% from the year-ago quarter.

Theme Parks revenues were $311 million, down 80.9% year over year. Universal Orlando Resort and Universal Studios Japan operated with limited capacity, while Universal Studios Hollywood remains closed.

Sky Revenue Details

Sky’s revenues increased 5.2% year over year to $4.79 billion. At constant currency (cc), revenues inched up 0.3%.

Direct-to-consumer revenues were up 9.4% (down 1% at cc) from the year-ago quarter to $3.94 billion.

Content revenues increased 23.3% (up 17.5% at cc) to $388 million.

Advertising revenues climbed 3.7% (down1.2% at cc) from the year-ago quarter to $462 million.

Total Customer Relationships decreased 21K to 23.695 million in the reported quarter.

Operating Details

Consolidated programming & production costs increased 3% from the year-ago quarter to $8.57 billion.

Consolidated adjusted EBITDA fell 11.3% from the year-ago quarter to $7.58 billion.

Segment-wise, Cable Communications’ adjusted EBITDA rose 10.5% from the year-ago quarter to $6.41billion. Cable Communications results include a loss of $50 million from the wireless business compared with a loss of $94 million in the year-ago quarter.

NBCUniversal’s adjusted EBITDA decreased 38.7% from the year-ago quarter to $1.28 billion, reflecting a significant decline in Theme Parks (down 127.7%)-adjusted EBITDA partially and Cable Networks (down 8.9%) partially offset by Filmed Entertainment (up 53.4%) and Broadcast Television-adjusted EBITDA (up 28.7%).

Sky’s adjusted EBITDA declined 42.8% year over year (down 45.4% at cc) to $515 million. Notably, Sky’s operating costs and expenses increased 17% (up 11.5% at cc) to $4.28 billion.

Consolidated operating income declined 23.7% year over year to $4.08 billion.

Cash Flow & Liquidity

As of Sep 30, 2020, cash and cash equivalents were $13.71 billion, up from $13.94 billion as of Jun 30.

Moreover, as of Sep 30, 2020, consolidated total debt was $104.42 billion, compared with $104.81 billion as of Jun 30, 2020.

In third-quarter 2020, Comcast generated cash from operations of $5.2 billion, up 0.7% year over year. Free cash flow was $2.29 billion in the reported quarter, up 10.5% year over year.

Dividends paid out in the third quarter were worth $1.1 billion.

Zacks Rank & Stocks to Consider

Currently, Comcast carries a Zacks Rank #3 (Hold).

Fox Corporation FOXA, Lionsgate LGF.A and News Corporation NWSA are some better-ranked stocks in the broader Consumer & Discretionary sector, all three carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox is set to release quarterly results on Nov 3. Both Lionsgate and News Corporation are scheduled to report earnings on Nov 5.

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