NBCU Sees Advertisers Returning, Will Restructure For Streaming

Peacock

When we last checked in with Comcast in April, the company was warning investors that its Q2 revenue hit would probably be even worse than in the first quarter.

While that prediction has borne out, Comcast chief Brian Roberts is optimistic about the cable giant’s ability to roll with the punches as theme parks in Asia reopen, Peacock performs above expectations and sports begin their return.

Here’s what came up during Comcast’s Q2 earnings call Thursday. Read the release.

Advertising coming back?

NBCU, Sky and Comcast Communications were all hit hard by the advertising pullback, but NBCU CEO Jeff Shell said advertisers are “coming back more rapidly than we anticipated” and that the upfront is now “in full swing.”

Shell was also optimistic about the return of live sports.

As expected, the Q2 numbers weren’t great. Broadcast television revenue dipped 1.6% YoY to $2.4 billion, and any gains were dragged down by lower ad revenue, which declined 27.9% YoY.

NBCU’s cable networks declined 14.7% YoY to $2.5 billion, due to less distribution and ad revenue. Ad revenue dipped 27% YoY.

In the United Kingdom, Sky’s Q2 revenue declined 15.5% to $4.1 billion as a result of many of the same factors that played out during the previous quarter, namely lower D2C revenue and diminished ad revenue. Sky’s ad revenue, still reeling from COVID-19 and from pesky gambling ads legislation, decreased 41.2% YoY to $321 million.

Last up, Comcast Communications saw Q2 ad revenue decline from $607 million this time last year to $428 million this quarter, a 29.6% decrease.

Streaming and Peacock

NBCU will soon restructure as viewership shifts from linear to non-linear.

“We are leaning into streaming,” Roberts said early in the call.

Roberts name-checked Comcast’s one-third ownership of Hulu, a sign that despite Disney’s operational control over the platform NBCU won’t abandon ship.

Shell noted how NBCU a few months ago combined its television and streaming businesses under Mark Lazarus, “which will allow us to more rapidly shift our resources and investment from linear to streaming.”

Lazarus is building a new structure, which will be announced “soon,” to manage that evolution.

Finally there’s Peacock, NBCU’s ad-supported streaming offering, which debuted to the general public in July and has now surpassed 10 million sign-ups. That figure is more than what Comcast execs projected. Peacock also had more engagement than Comcast initially forecasted.

Shell was sanguine about what these figures portend for the future when the service becomes host to even more programming, such as the (now) 2021 Olympics and “The Office.”

But it’s important to note that the sign-ups metric simply gauges early returns. The long-term measurement NBCU will use is monthly active users (MAUs), which it hasn’t yet started assessing – it’s still too early to convert sign-ups to MAUs.