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Peacock Quarterly Loss Narrows to $825M as Streamer Hits 31M Subscribers

Peacock, the streaming service of Comcast’s entertainment unit NBCUniversal, grew its fourth-quarter revenue by 57 percent to surpass $1 billion for a quarter for the first time, while narrowing its loss. The streamer ended 2023 with 31 million paying subscribers, the media, entertainment and technology giant disclosed Thursday.

Comcast president Mike Cavanagh said at an investor conference in early December that Peacock had reached 30 million subs. It ended September with 28 million subscribers after adding 4 million during the third quarter. That meant a gain of around 3 million in the final quarter of 2023.

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Comcast CFO Jason Armstrong told analysts during a morning call that the 3 million new Peacock subscribers during the latest financial quarter came in part from viewers drawn to NFL and Big Ten football games, without specifying actual numbers. NBCU’s loss related to Peacock amounted to $825 million in the fourth quarter, compared with a year-ago loss of $978 million on revenue of $660 million.

Cavanagh during the conference call talked up Peacock streaming a Saturday night wildcard NFL playoff game, which averaged 23 million viewers on the flagship online platform, local NBC affiliates in the teams’ home markets and on the NFL+ mobile app.

“Our investment in the network and our technology platforms built over decades enabled us to shine, delivering a seamless experience on the internet and Peacock, demonstrating that our company is in an excellent position to win in this era of high bandwidth,” he told analysts.

To additionally bolster Peacock, Cavanagh reiterated that Christopher Nolan’s Oscar-nominated biopic Oppenheimer will exclusively stream on Peacock starting Feb. 16, well after its theatrical release in July 2023. And he touted the 2024 Olympics set to stream on Peacock live, with many of the events also airing live on NBC and other NBCUniversal TV platforms.

Cavanagh called Peacock “the fastest-growing streamer in the U.S.,” as he looked beyond continuing operating losses to leveraging the streamer as part an overall and expanding TV offering for consumers across a range of NBCUniversal platforms treated as one holistic ecosystem. CFO Armstrong told analysts: “2023 marked the peak in annual losses at Peacock and for 2024 we expect to show meaningful improvements in losses, versus 2023.”

The entertainment conglomerate previously had vowed to reach “peak losses” at around $2.8 billion for Peacock in 2023, down from $3 billion previously. On Thursday, it disclosed that the 2023 loss had amounted to $2.75 billion. Peacock’s revenue continued to grow in the latest period and for all of 2023.

Cavanagh told analysts he was more focused on how Peacock was faring amidst NBCUniversal TV’s overall strategy, than on its own. “I’m less focused on what stand-alone Peacock losses are doing than I am on doing what’s right for the long term and the totality of the media business, which is linear and streaming. I think we’ve navigated a very good path for us,” he said.

As legacy media cedes streaming subscriber scale to Netflix, streaming profits have been in focus for Wall Street. For comparison, in its most recent quarter, Warner Bros. Discovery posted a $111 million profit for its direct-to-consumer division that includes Max/Discovery+, while Paramount Global disclosed a $238 million streaming loss and Disney lost $387 million on its Disney+/ESPN+/Hulu combined business.

The latest Peacock updates were part of Comcast’s fourth-quarter and full-year earnings report.

The company also reported its highest-ever fourth-quarter and full-year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for its theme parks unit. Earnings increased 11.6 percent to $872 million in the fourth quarter and 24.7 percent to $3.3 billion for the full year.

Comcast lost 389,000 pay-TV subscribers in the fourth quarter, compared with a loss of 440,000 in the year-ago period. It also lost 34,000 broadband subscribers in the latest period after losing 23,000 in the fourth quarter of 2022, a data point that Wall Street analysts will closely analyze.

At Comcast’s NBCUniversal, content & experiences results improved in the fourth quarter, driven by theme parks, media and studios. Content & experiences earnings increased 2.3 percent, or 5.9 percent when excluding severance payments.

Fourth-quarter studios unit revenue climbed 4.3 percent to $3.06 billion, thanks to higher theatrical revenue, including the performance of Five Nights at Freddy’s, Trolls Band Together, The Exorcist: Believer and Migration. Content licensing revenue was hardly changed “as higher content licensing revenue at our film studios was offset by lower content licensing revenue at our television studios, primarily due to the timing of when content was made available under licensing agreements, including the impacts of the Writers Guild and Screen Actors Guild work stoppages in the current year period.”

Quarterly earnings for the studios segment jumped 83 percent to $308 million as higher revenue combined with virtually unchanged operating expenses. “The consistent operating expenses primarily reflected consistent programming and production expenses, due to lower costs associated with lower content licensing sales at our television studios, including the impacts of the work stoppages in the current year period, offset by higher film costs,” Comcast explained.

Media unit revenue rose 3.1 percent to $6.98 billion “due to higher domestic distribution, international networks and other revenue, partially offset by lower domestic advertising revenue,” Comcast said. “Domestic distribution revenue increased primarily due to higher revenue at Peacock, driven by an increase in paid subscribers. International networks revenue increased primarily reflecting an increase in revenue associated with the distribution of sports channels and the positive impact of foreign currency.”

Domestic advertising revenue dropped in light of an unfavorable comparison to Telemundo’s broadcast of the FIFA World Cup in the prior-year period. Excluding the World Cup contribution, advertising revenue increased 2.7 percent, “primarily due to an increase in revenue at Peacock, partially offset by lower revenue at our networks.”

Media unit adjusted EBITDA in the fourth quarter fell 50.2 percent, though, to $108 million because of higher operating expenses, driven by increased sports and Peacock programming costs, “partially offset by a decrease in content costs at our entertainment television networks, including the impacts of the Writers Guild and Screen Actors Guild work stoppages in the current-year period.” The increase in sports costs reflected programming rate increases for the NFL and English Premier League, as well as the addition of Big 10 content. The year-ago period also included lower costs for leagues paused because of the soccer World Cup.

Quarterly theme parks unit revenue increased 12.2 percent, driven by higher revenue at both international and domestic parks.

Fourth-quarter theme parks earnings rose 11.6 percent as the revenue gain more than offset higher operating expenses, which were caused by “higher costs primarily associated with increased guest attendance.”

The company’s “corporate and other” segment swung from a $28 million profit to a $5 million loss in the fourth quarter of 2023, with Comcast citing “an increase in operating expenses related to Sky operations in Germany, due to higher Bundesliga costs compared to the prior year period when games were paused for four weeks to accommodate the timing of the FIFA World Cup, and content charges related to a shift in our entertainment content development strategy.” The segment includes such things as personnel costs, the Sky-branded services and networks in Germany, the Philadelphia Flyers ice hockey team, the Wells Fargo Center arena in Philadelphia, and Xumo, the streaming platform joint venture with Charter Communications.

Comcast, led by chairman and CEO Brian Roberts and Cavanagh, has frequently been mentioned by bankers and Wall Street analysts as a possible player in future industry M&A. But management has signaled it would not easily be pulled into dealmaking. Cavanagh reiterated late last year that the “bar is very high” for the company to pursue any deals. “Our job always is to look at things, but all I can say is the bar is really high because I really like the organic hand we have,” he explained. “We don’t need to do anything inorganic acquisition-wise.”

Roberts on Thursday touted the company’s performance. “We capped off 2023 and the fourth quarter with excellent operational and financial performance,” he said. “[We] were the number one studio in worldwide box office for the first time since 2015; and maintained Peacock’s position as the fastest-growing streamer in the U.S.

“For the third consecutive year, we generated the highest revenue, adjusted EBITDA and adjusted earnings per share in our company’s history,” Roberts emphasized. “At the same time, we invested in future growth, returned $16 billion to shareholders and maintained a healthy balance sheet.”

Looking ahead, the CEO said: “2024 is already off to a great start — I couldn’t be more proud of how our company came together to deliver a record-breaking NFL Wild Card game on Peacock and the nation’s biggest night on the internet ever. Our unique and complementary capabilities will enable us to capitalize on the many opportunities ahead.”

Comcast’s board increased the company’s dividend for the 16th consecutive year.

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