Comcast’s Q3 Revenue Fell Due To Tough Comparison, Outlook Remains Solid

Comcast (NASDAQ:CMCSA) released its Q3 earnings on October 26. Comcast’s consolidated revenues declined marginally by 1.6% y-o-y to around $21 billion as last year’s quarterly revenues were buoyed by the broadcast of the Rio Olympics. Excluding revenues from the Rio Olympics telecast, Comcast’s consolidated revenues grew by 5.8%. Additionally, adjusted EBITDA grew by 5% y-o-y to $7.18 billion. Below we discuss the key takeaways from the results.

Our $40 price estimate for Comcast is around 10% ahead of the market price.

• Despite the loss in video subscribers, which declined by 125,000 to 22.39 million, cable communication video revenue grew by 4.2% to $5.82 billion. As a result, monthly average revenue per customer for cable videos improved from $83 last year to $86.70 in Q3. This indicates that company’s cable TV video services, which are also clubbed in the Xfinity Triple Play bundle, remain popular among its subscribers.
• In the last few years, the company has been focusing on improving its footprint in the broadband internet space by launching new services such as xFi and Xfinity mobile. During the quarter, the company added 188,000 new residential high-speed internet customers and 32,000 business service customers. As a result, the broadband revenues grew by 9% to $3.70 billion as the internet subscriber base swelled to 25.52 million.
• A decrease in political advertising revenue negatively impacted ad revenues, which decreased 13.2% to $542 million.
• NBCUniversal’s revenues declined by 12.7% to $8 billion this quarter due to a lack of major events that rival the popularity of the Olympics. As a result, revenues for both cable networks and broadcast television declined. While cable network revenues declined by 11.5% to $2.6 billion, broadcast revenues declined by 3.1% to $2.13 billion. Excluding the impact of the Rio Olympics telecast, revenues for cable networks and broadcast TV grew by 3.7% and 12.3%, respectively.
• Theme Park revenues grew once again to $1.55 billion, reflecting higher per capita spending. The company continues to invest in the theme park business as it is considered a key growth driver in the future.
• Filmed Entertainment revenue decreased 0.5% y-o-y to $1.8 billion due to lower theatrical revenue compared to last year.

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