Comcast Tops Q3 Estimates as Peacock Stays Profitable, but Broadband Losses Widen to 144,000

CMCSA beat third-quarter expectations on Oct. 22, reporting adjusted EPS of $1.07 against a $0.98 consensus and revenue of $29.3 billion against an estimate of about $29.22 billion. The beat came on a shrinking base: reported revenue fell 6.1% from $31.2 billion a year earlier, adjusted EBITDA fell 5.8% to $9.1 billion, and adjusted EPS was down 4.0% year over year. Much of the revenue decline reflects businesses Comcast no longer owns, after the Versant cable-network spinoff closed on Jan. 2 and the Sky Germany sale on May 31.

The weak spot remains the connectivity business. Comcast lost 144,000 domestic residential broadband customers in the quarter, up from 91,000 a year earlier and worse than analyst estimates. Wireless partly offset that, with 368,000 net line additions, though that was below the 414,000 added a year earlier. Theme parks were the other drag, with profit down 17% to $780 million and revenue of $2.60 billion short of the $2.71 billion estimate.

Media was the bright side. Peacock posted its second consecutive profitable quarter, with adjusted EBITDA of $261 million on $1.8 billion of revenue, compared with a $217 million loss a year earlier, and paid subscribers rose 17% to 48 million. Universal's "The Odyssey" became the studio's highest-grossing film of all time at nearly $1.8 billion worldwide. Free cash flow was $4.2 billion, down from $4.9 billion, and Comcast has suspended share buybacks through its planned separation of NBCUniversal and Sky into a standalone company, which management says is on track to close by the middle of next year.

Shares rose despite the subscriber losses: CMCSA traded about 3.4% higher at $22.82 as of 1:22 p.m. ET, per SentiSense market data. The next tests are whether broadband losses stabilize as fixed wireless competition continues, whether Peacock's profitability holds with subscribers flat from the second quarter, and how the NBCUniversal and Sky separation reshapes the remaining company.