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Comcast said Thursday it has begun to explore a separation of its cable networks business.
The separation would not include the broadcast network NBC or streaming platform Peacock.
The comments came during Comcast’s third-quarter earnings call on Thursday.
Brian Roberts, chairman and chief executive officer of Comcast NBCUniversal, during the Bloomberg Screentime event in Los Angeles, California, US, on Thursday, Oct. 10, 2024.
Kyle Grillot | Bloomberg | Getty Images
Comcast is exploring a separation of its cable networks business, President Mike Cavanagh said Thursday.
During the company’s third-quarter earnings call with investors, Cavanagh said the company is exploring creating “a new, well-capitalized company owned by our shareholders and comprised of our strong portfolio of cable networks.”
The possible separation would not include broadcast network NBC nor streaming service Peacock, he added. NBCUniversal’s cable networks portfolio includes Bravo, E!, Syfy, Oxygen True Crime, USA Network, as well as news networks MSNBC and CNBC.
The company lost 365,000 cable TV customers during the third quarter.
“Like many of our peers in media, we are experiencing the effects of the transition in our video businesses and have been studying the best path forward for these assets,” Cavanagh said, according to preliminary transcript of the call from FactSet.
“We are not ready to talk about any specifics yet, but we’ll be back to you as and when we reach firm conclusions,” he said.
Shares of Comcast were up more than 6% in premarket trading.
The comments come as millions of customers continue to flee the traditional pay TV bundle in favor of streaming. Comcast has been beefing up Peacock, which got a boost during the third quarter when it exclusively aired the Summer Olympics in Paris.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
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Comcast reported third-quarter earnings before the bell.
The company beat on estimates as the Summer Olympics in Paris helped boost NBCUniversal’s revenue and Peacock’s subscriber count.
Domestic broadband revenue grew despite continued slowing customer growth in the segment.
NBCUniversal kicks off it’s new Peacock streaming service.
Todd Williamson | Peacock | NBCUniversal | Getty Images
Comcast beat third-quarter earning expectations on Thursday, as the Summer Olympics in Paris boosted NBCUniversal’s revenue and Peacock’s subscriber count.
Shares of Comcast gained 6% in premarket trading Thursday.
Here is how Comcast performed, compared with estimates from analysts surveyed by LSEG:
Earnings per share: $1.12 adjusted vs. $1.06 expected
Revenue: $32.07 billion vs. $31.66 billion expected
For the quarter ended Sept. 30, net income was down 10% to $3.63 billion, or 94 cents a share, compared with $4.05 billion, or 98 cents a share, a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, fell 2% to roughly $9.74 billion. Adjusting for one-time items, Comcast reported earnings per share of $1.12 for the quarter.
The company’s revenue rose 6.5% to $32.07 billion compared with the same period last year. Overall revenue was boosted by the Summer Olympics in Paris, which NBCUniversal exclusively broadcast in the U.S., and domestic broadband revenue — despite continued slowing customer growth.
Revenue for the media segment – mainly comprised of NBCUniversal – was up nearly 37% to $8.23 billion, largely due to the Olympics. Excluding the Summer Games, revenue was up almost 5%.
This more than offset the decrease in adjusted EBITDA for the media segment, due to higher operating expenses related to the Olympics, as well as higher programming costs at Peacock and in other sports TV programming.
The Summer Olympics in Paris proved to be a success for NBCUniversal, as it attracted an average daily viewership of 31 million people across NBC’s TV and streaming platforms and generated a record $1.2 billion in advertising revenue, CNBC previously reported.
This boosted the overall revenue for the content and experiences segment – which also includes the theme parks and film studios – by 19.3% to roughly $12.6 billion. That total includes $1.9 billion of incremental revenue from the Paris Olympics.
Peacock also enjoyed a boost from the Olympics – where the entirety of the Games were exclusively streamed – with 3 million added subscribers. Paid subscribers for the platform increased 29% year over year to 36 million. Peacock revenue was up 82% to $1.5 billion.
Losses stemming from Peacock improved for the segment, with an adjusted EBTIDA loss of $436 million during the quarter, compared with $565 million in the same period last year.
The company’s film studios, also part of the content and experiences segment, saw revenue increase 12.3% to $2.83 billion compared with the prior year. Theatrical revenue was boosted by the recent successful releases of “Despicable Me 4” and “Twisters.”
NBCUniversal’s theme parks revenue decreased 5.3% to roughly $2.3 billion due to lower attendance. The theme parks have weighed on the company recently as surging attendance following Covid lockdowns has cooled.
Meanwhile, the broadband unit – the cornerstone of Comcast’s business – continued to reflect the ongoing industry trends.
Cable broadband customer growth has slumped across the industry. Comcast executives have pinned this on a slowdown in the buying and selling of homes. Competition has also ramped up from wireless providers like Verizon and T-Mobile.
For Comcast this quarter, it was a mixed bag. The government’s Affordable Connectivity Program (ACP), which had offered a discount for qualifying low-income households, ended earlier this year.
Total domestic broadband net losses amounted to 87,000, but excluding those that stemmed from the end of the ACP, the company estimates there was growth of 9,000 customers.
Domestic broadband revenue increased 2.7% to $6.54 billion compared to the prior year, and average revenue per user – the continued source of growth for the segment despite lagging additions – increased 3.6%.
Meanwhile, Comcast’s wireless business added 319,000 customers, bringing its total to about 7.5 million lines. The company lost 365,000 cable TV customers during the quarter.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.
This story is developing. Please check back for updates. More
The U.S. Labor Department said about 44,000 U.S. workers were on strike at the time of its employment survey earlier this month.
Economists expect the U.S. to have added 100,000 jobs in the month.
The DOL’s jobs report on Friday will be its last before the Nov. 5 election.
Boeing workers gather on a picket line near the entrance to a Boeing facility during an ongoing strike on October 24, 2024 in Seattle, Washington.
David Ryder | Getty Images
Boeing’s more than seven-week machinist strike is set to hit Friday’s U.S. jobs report — the last one that will be released before Nov. 5 presidential election and the Federal Reserve’s meeting next week. The company’s impending job cuts, meanwhile, will take months more to show up.
Some 44,000 U.S. workers were on strike when the Labor Department conducted its survey in mid-October. About 33,000 of them are Boeing machinists, who walked off the job on Sept. 13 after overwhelmingly voting against a union-endorsed labor contract and in favor of their first strike since 2008.
Economists expect the U.S. to have added 100,000 jobs in October. Bank of America this week forecast that payroll tallies will be at least 50,000 lower than they would have otherwise been because of the strikes and affects of both Hurricane Helene and Hurricane Milton.
Federal Reserve Governor Christopher Waller said in an Oct. 14 speech that those factors could have a 100,000-job impact on the October report and called the reductions a “significant but temporary loss of jobs.” He said they “may have a small effect on the unemployment rate, but I’m not sure it will be that visible.”
Boeing’s machinist strike has complicated the plane maker’s already difficult position as its new CEO Kelly Ortberg tries to steer the giant U.S. manufacturer and exporter out of safety, quality and financial crises. The unionized machinists, mostly in the Seattle area, voted 64% against a new proposal last week, which included 35% wage increases, compared with a 25% wage increase in an earlier tentative agreement.
In an aerial view, a Boeing 737 Max fuselage is seen on a railcar during an ongoing strike by Boeing factory workers in Seattle on Oct. 24, 2024.
David Ryder | Getty Images
The Biden administration has gotten involved, urging the two sides to reach a deal.
“With the continued assistance of Acting Secretary of Labor Julie Su, your Union bargaining committee had a productive face-to-face meeting with the company to address key bargaining issues,” the International Association of Machinists and Aerospace Workers District 751 said late Tuesday.
Su had met with both sides before the last proposal was brought to a vote on Oct. 23.
Boeing’s impact on U.S. employment numbers is set to continue. CEO Ortberg said earlier this month that the company will cut 10% of its global workforce, or 17,000 people, though job-loss warning letters aren’t expected to go out until mid-November.
Ortberg, who took over as CEO in early August, said Boeing needs to become leaner and focus on its core businesses.
“One of the things I’ve heard from a lot of employees is there’s just too much overhead. It slows them down in being able to get their work done,” he said on an Oct. 23 quarterly call. “So we’re going to really focus this workforce reduction in streamlining those overhead activities, consolidating things that can be consolidated.”
Layoffs and their announcements are more complicated to factor into federal employment surveys than strikes because “we don’t have a good sense of when they occur,” noted Bank of America economist Stephen Juneau.
The impact of the Boeing’s strike could lead to further cuts in the fragile aerospace supply chain.
Boeing fuselage maker Spirit AeroSystems earlier this week put about 700 Wichita, Kansas, workers on a 21-day furlough. A spokesman for the company, which Boeing is in the process of acquiring, told CNBC last week that Spirit is considering hundreds of additional furloughs or layoffs if the Boeing strike lasts past Nov. 25. More
Peloton has tapped Ford executive Peter Stern to be its next CEO.
The longtime automotive executive was last overseeing Ford’s subscription services.
Peter Stern, CEO of Peloton Interactive.
Courtesy: Peloton Interactive
Peloton on Thursday said it has appointed Peter Stern, a Ford executive and the cofounder of Apple Fitness+ to be its next CEO and president.
Stern, the president of Ford Integrated Services, primarily oversees the automotive company’s subscription services, such as BlueCruise, Pro Intelligence, connectivity and security. He also led the company’s digital product team.
Stern is slated to step down from his role at Ford and take the helm of Peloton on Jan. 1. Interim co-CEO Karen Boone will stay in the role through the end of the calendar year, while her counterpart, Chris Bruzzo will step down from the co-CEO role on Friday. Both Boone and Bruzzo will stay on Peloton’s board.
Stern is the third CEO to lead Peloton in its history. The news came alongside Peloton’s fiscal first-quarter earnings report. Shares of the company jumped 20% in premarket trading.
“Peter is a seasoned strategist with a track record of driving sustainable growth through innovation, and we have every confidence in his ability to lead Peloton during this important time. He brings meaningful expertise in scaling differentiated technology-oriented platforms and has a deep understanding of the health and wellness sector – making him uniquely suited to serve as Peloton’s next CEO,” Jay Hoag, the Chairperson of Peloton’s board, said in a news release.
“What’s more, Peter embodies Peloton’s core values, including operating with a bias for action, empowering teams of smart creatives and working together.”
The announcement comes about six months after Peloton announced that former Spotify and Netflix executive Barry McCarthy would be stepping down after about two years on the job.
McCarthy had taken over from founder John Foley and had worked to bring Peloton back from the brink of extinction by dramatically cutting costs and redirecting strategy.
Peter Stern, CEO of Peloton Interactive.
Courtesy: Peloton Interactive
Peloton’s decision to hire Stern indicates that it is tripling down on the company’s main value proposition to investors at the moment: its high-margin, recurring subscription revenue.
Stern’s background running Ford’s subscription business will likely assist in building out, and sustaining, Peloton’s connected fitness subscribers and app subscribers.
In a news release, Peloton said that it sought out a new CEO that appreciates and loves Peloton’s products, understands the company’s challenges and opportunities and is passionate about helping people achieve their fitness goals.
Stern was an early adopter of Peloton, having been a member since 2016, and “has spent over 20 years operating at the nexus of hardware, software, content and services at Ford, Apple and Time Warner Cable,” the company said.
As the cofounder of Apple Fitness+, he helped the vertical grow its subscription base into the millions and knows how to operate a “complex, subscription-based business,” Peloton said.
The company said it was also looking for a product innovator and strategist and pointed to the 30-plus patents Stern has secured over the years, including an online media content patent.
“Working for Peloton is a dream come true for me,” Stern said in a statement. “My goal is to help millions of people live longer, healthier and happier lives. Peloton, with its unique combination of people, products and passionate Members, provides me an opportunity to do just that.”
This story is developing. Please check back for updates. More
Peloton’s fiscal first-quarter results beat Wall Street’s expectations.
The connected fitness company raised its full-year adjusted EBITDA guidance but posted a weaker-than-expected holiday forecast.
The Bike and Tread maker also announced a new CEO.
A Peloton bike is displayed at a Dick’s Sporting Goods store on May 08, 2024 in Daly City, California.
Justin Sullivan | Getty Images
Peloton is back to generating free cash flow and is edging within reach of profitability as the connected fitness company reins in costs and looks to improve the unit economics behind its hardware, it said Thursday.
Despite the progress, Peloton is expecting to lose more members and sell fewer bikes and treadmills than Wall Street analysts had expected during its all-important holiday quarter.
Still, the stock rose 20% in premarket trading Thursday after the quarterly update and the announcement of a new CEO.
Here’s how Peloton did in its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
Loss per share: zero cents vs. 16 cents expected
Revenue: $586 million vs. $574.8 million expected
The company’s reported net loss for the three-month period that ended Sept. 30 was $900,000, or effectively breakeven on a per-share basis, compared with a net loss of $159.3 million, or 44 cents per share, during the same period a year earlier.
Sales dropped to $586 million, down about 1.6% from $596 million a year earlier.
As Peloton prepares for its holiday quarter, which is typically its strongest for hardware sales, the company is expecting revenue to come in between $640 million and $660 million, below Wall Street expectations of $671.4 million, according to StreetAccount.
It’s also expecting to have fewer paid app subscribers than analysts had forecast, reflecting its decision to shift marketing dollars toward product development and away from its low-priced app — a key focus area of former CEO Barry McCarthy.
Peloton announced in May that McCarthy would be stepping down after roughly two years in the top job. On Thursday, the company said Ford executive Peter Stern would be taking over.
The company is expecting to have between 560,000 and 580,000 paid app subscribers by the end of its current quarter, compared with expectations of 608,200, according to StreetAccount.
During Peloton’s fiscal first quarter, it cut operating expenses by 30% compared with the previous year and posted nearly $116 million in adjusted EBITDA along with almost $11 million in free cash flow.
It’s expecting adjusted EBITDA of between $20 million and $30 million during its current quarter, compared with StreetAccount EBITDA estimates of $13.9 million.
For fiscal 2025, Peloton raised its full-year EBITDA guidance – a key metric that investors are watching to gauge the company’s future value. It said it’s now expecting to generate between $240 million and $290 million in adjusted EBITDA, compared with a previous range of $200 million and $250 million. It’s projecting revenue to be between $2.4 billion and $2.5 billion, on par with analyst expectations of $2.46 billion, according to LSEG.
The gains are a result of a previously announced cost-cutting plan and the company’s efforts to improve the unit economics of its hardware, which had long been a money-losing business for the company.
During the fiscal first quarter, Peloton raised the recommended retail price for its Bike and Bike+ in its international markets and increased the price of its Row in North America, while also cutting down on discounts across its hardware portfolio.
Those efforts, along with a better mix between its various revenue streams, boosted its connected fitness margin to 9.2% during the most recent quarter – an increase of 6 percentage points compared with the year-ago period.
This story is developing. Please check back for updates. More
