Peak Losses In 2023 At $3 Billion

Comcast
CMCSA
Corp. reported first quarter earnings on Thursday and investors were focused on a number of items, including its online streaming video platform Peacock. Most media companies have reversed course and instead of trying to grab significant subscriber growth, they’ve been more attentive to the bottom line.

Although management touted that Peacock paid subscribers in the U.S. increased more than 60% to 22 million while revenue increased 45% to $685 million, sequentially it was a different story. Revenue growth slowed dramatically from +$154 million (+30.4%) in Q4 2022 to just +$25 million (+3.8%) in the first quarter of 2023.

Streaming services remain highly dependent on advertising revenue, and a number of media companies have cited a weak overall ad environment for a slowdown in revenue.

Peacock Financial Metrics

Q1 Q2 Q3 Q4 Full Year Q1

2022 2022 2022 2022 2022 2023

Revenue ($ mil.) 472 444 506 660 2,082 685

Paid Subs (mil.) 13 13 16 21 21 22

P&P* ($ mil.) 588 606 767 1,212 3,174 1,035

MPO# ($ mil.) 340 305 353 426 1,423 354

Costs ($ mil.) 928 912 1,120 1,638 4,597 1,389

Losses ($ mil.) (456) (467) (614) (978) (2,515) (704)

P&P = Programming & Production. MPO + Marketing/Promotion/Other Source: Comcast Corp.

Still, the company has come a long way, from just $778 million in revenue for 2021 (which it ended with 9 million paid subscribers) to over $2 billion in 2022 revenue and ending the year with 21 million paid subscribers.

Losses at Peacock were almost $1 billion in the fourth quarter of 2022, up significantly from $614 million in Q3 2022 and less than half a billion in the first and second quarters of 2022. Management expects losses to peak at Peacock in 2023 at around $3 billion, and then begin to steadily improve.

Peacock Financial Metrics 2021

Q1 Q2 Q3 Q4 Full Year

2021 2021 2021 2021 2021

Revenue ($ mil.) 91 122 230 335 778

Paid Subs (mil.) 3 4 6 9 9

P&P# ($ mil.) 230 295 475 596 1,596

MPO ($ mil.) 138 190 274 298 901

Costs ($ mil.) 368 485 750 894 2,497

Losses ($ mil.) (277) (363) (520) (559) (1,718)

P&P = Programming & Production. MPO + Marketing/Promotion/Other Source: Comcast Corp.

On the company’s earnings call, President of Comcast Corp. Michael Cavanaugh was upbeat on Peacock, citing a “growth area is content and especially on the streaming side. We have a decades-deep library of iconic films and television. And we spend over $20 billion each year to produce and provide programming that spans every genre: sports, news, entertainment, dramas and film, which has resulted in the broadest reach of any media company. Over 100 million people engage with our content every month,” he said.

In addition, he noted, “We made the strategic decision to put our Pay-One window on Peacock, which really kicked in at the end of last year. We now have one of the most robust movie offerings on streaming. The hits we have at the box office roll on to Peacock, and this is proving to be both a successful acquisition and retention tool.”

NBCUniversal has decided to break the traditional 18-month Pay-One window into three periods, with titles available for the first and last four-month segments exclusively on Peacock.

It’s not just the company’s deep library which is fueling Peacock, however. “…The strength of content from our TV studio, which powers the content on NBC and helped make us #1 for many years from all the Dick Wolf Procedurals and SNL coupled with highly popular content on Bravo, this all goes to Peacock the next day. Add to this our originals, where we are just getting started, shows like Poker Face, which launched and immediately landed near the top of Nielsen’s U.S. streaming original list. And we have lots more coming.”

Peacock paid subs are watching about 20 hours per subscriber per month, which the company plans to grow by adding more originals. This could further fuel ad revenue during these tough times in the ad market. Cavanaugh noted that weakness in the ad market had stabilized. When you exclude the Olympics and the SuperBowl, Peacock ad revenue increased by 90%.

Going forward, the competition will continue to be intense for streaming video subscribers, and some of the smaller players will likely end up shutting down.