Comcast profit drops as Covid-19 shutdown offsets broadband boost
Comcast today reported a sharp drop in profit for the first quarter as the shutdown of cinemas and theme parks due to the coronavirus outbreak offset a rise in broadband usage.
The US media giant posted net income of $2.1bn (£1.7bn) in the first three months of the year, down almost 40 per cent year on year.
Revenue also slipped a marginal 0.9 per cent over the period to $26.6bn.
Comcast beat expectations in its broadband division, adding 477,000 customers and posting a 9.3 per cent rise in revenue to $5bn amid increased demand for internet services sparked by the coronavirus lockdown.
But these gains failed to mitigate wider downturns in the company’s business, as a huge slowdown in advertising spend during the crisis took its toll.
Sky, which Comcast snapped up for $39bn in 2018, was particularly hard hit by the squeeze on advertising, suffering a 5.8 per cent fall in revenue to $4.5bn.
Comcast’s NBCUniversal division posted a seven per cent fall in revenue to $7.7bn as film income was slashed by lower distribution and the closure of cinemas around the world.
The company has been forced to delay the release of several blockbuster hits, including the new James Bond film and the latest instalment of Fast and Furious, as a result of the pandemic.
Universal has recouped some of this lost revenue by releasing Trolls World Tour via streaming services rather than via a theatrical release.
The decision has sparked a bitter row with AMC Theaters, owner of cinema chains including Odeon, which has said it will boycott all films made by Universal when the lockdown ends. Cineworld has now also instigated a ban on the distributor.
Theme Parks were a further source of woe for Comcast, with closures prompting a 31 per cent fall in revenue in the first quarter to $869m.
Comcast warned the uptick in its broadband business would not continue into the second quarter due to a “significant deterioration in domestic economic conditions”, while NBC Universal and Sky would also suffer worse hits over the next three months.
“As a result, we expect the impacts of Covid-19 to increase in significance in the second quarter 2020 and to have a material adverse impact on our consolidated results of operations over the near-to-medium term,” it said in a statement.
Chief executive Brian Robert said: “We have a strong balance sheet, terrific portfolio of assets, and a world-class management team.
“This is a moment in time; and when it passes, I am very confident that the decisions we are making now will enable us to emerge from this crisis as a healthy, strong company that is well positioned to continue to grow and succeed.”