Investors rewarded Meta on Wednesday for reporting stronger-than-expected Q2 earnings, driven by robust ad revenue growth and promising user engagement metrics. The company’s stock rose more than 11% in after-hours trading.
The following morning, investors rewarded Comcast for losing fewer broadband and video subscribers than expected in Q2, with a roughly 5% bump in share price during premarket trading.
It’s a study in contrasts.
In all fairness, though, you can’t really compare a broadcaster’s business with a Big Tech company.
Despite the growth and promise of Peacock, Comcast, which reported second quarter earnings on Thursday, is still navigating big challenges in its legacy business lines, namely ongoing declines in broadband and cable TV subscribers.
Sporting chance
That said, NBCU’s streaming losses were down to $100 million in Q2 from $348 million year over year, representing significant progress as the platform nears break-even.
Although total advertising revenue for the media segment overall was down 7% due to tough political comparisons and the volume and timing of sports content – Q2 has historically been a seasonally light sports quarter for Comcast – Peacock’s revenue was up 18% in the second quarter to $1.2 billion.
Peacock’s subscriber base also remained steady at 41 million.
“Steady” is, of course, another way to say “flat.” But executives are optimistic that, once the upcoming NBA season begins in October, subscriptions will grow. NBCU signed an 11-year media rights agreement with the NBA last year that will bring the NBA to Peacock and back to NBC for the first time since the early 2000s.
“The second quarter has historically lacked tentpole sports, so we’ve been more susceptible to fluctuations in general entertainment ratings,” said Comcast CFO Jason Armstrong. “We look forward to that changing next year with the launch of the NBA.”
Playing the long game
Comcast can also look forward to spending a heck of a lot of money for those NBA rights. It’s shelling out $2.45 billion per year, which will total roughly $27 billion over the course of the partnership.
But it’s totally worth it, Comcast executives told investors. The NBA will give NBCU the ability to deliver sports programming throughout the year and it was also a sweetener for advertisers during upfront negotiations.
Several weeks ago, NBCU announced the highest overall ad sales volume commitments in the company’s history and its largest sports commitments to date.
A “big piece of that is having the NBA in there,” said Comcast President Mike Cavanagh. “That’s delivered strongly.”
And, hey, Peacock didn’t even exist five years ago and now it’s on a clear path to profitability with narrowing losses.
“Obviously, there are a lot of challenges in the ecosystem, but we took on the challenge and opportunity of creating a streaming service,” Cavanagh said. “Our overall media results this quarter were driven by the continued meaningful progress we’re making in our pivot to streaming.”
