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Comcast struggles as theme parks, movies, and sports suddenly disappear

All of Comcast’s divisions are feeling the impact of the coronavirus lockdown

Illustration by Alex Castro / The Verge

With theme parks and movie theaters closed and major sports events canceled, there were few parts of Comcast’s business that didn’t feel the impact of the novel coronavirus pandemic in the first quarter of 2020. And company executives said on Thursday that they don’t expect to see a whole lot of improvement for the second quarter.

Comcast posted revenue of $26.6 billion for the first quarter, a 0.9 percent decline year over year, and net income of $2.1 billion, a 40 percent drop from the year-ago quarter.

Basically, there was less for viewers to watch, and that meant less programming for Comcast to run ads against. The Q1 results reflect “audience ratings declines and reduced advertiser spending resulting from the postponement of sports events due to COVID-19, partially offset by higher pricing,” Comcast said in a statement.

The company’s NBCUniversal segment struggled the most during the first quarter, with a 7 percent revenue decline to $7.7 billion. Comcast said last week that many of the shows it had planned for its new Peacock streaming service wouldn’t be ready until next year. (Disclosure: Comcast and NBCUniversal are investors in Vox Media, parent company of The Verge.)

Revenue for its filmed entertainment division was down 22 percent, and theme park revenue was down 32 percent, as all of its Universal theme parks were closed in March due to the pandemic. Comcast CFO Michael Cavanagh said on Thursday that the company does not know when the parks will reopen and added that it was pausing construction on its fourth gate, Epic Universe, at Universal Studios Orlando.

Comcast’s ad revenue for the quarter was down 2.2 percent. “COVID-19 began to impact cable advertising at the end of the first quarter, and we expect advertising to be down significantly in the second quarter,” Cavanagh said during the earnings call.

Many large companies that posted first quarter earnings this week reported lower advertising revenues due to the pandemic, although perhaps not all are feeling it as acutely as Comcast — at least, not yet. Alphabet parent Google said on Tuesday that it “experienced a significant slowdown in ad revenues” last month, but its revenue was up 13 percent. Facebook also said it saw ad revenues slow but still saw profit up 102 percent from the year-ago quarter. And Twitter, which reported first quarter earnings today, had a huge spike in users but said its ad revenues fell apart in March.

Comcast’s Sky division, the UK broadcaster Comcast acquired in 2018, saw revenue decline 5.8 percent in the quarter, and it lost 65,000 Sky customers due to sporting events being postponed and some channels being suspended. The company said it has been allowing Sky customers to pause sports-related subscription payments to “mitigate the risk of customer disconnect.”

Comcast’s cable revenue rose in the first few months of the year, but it lost 409,000 cable TV customers as people continue to move toward streaming options.

Even though Comcast lost cable TV customers in Q1, it added 477,000 internet customers, which the company said on an earnings call was its best quarterly number in more than a decade. Wireless revenue was up 52 percent.

On the earnings call, the company said a residential rate adjustment at the beginning of the year “was a significant contributor to both the market increase, and the video subscriber loss in the quarter.”

But Comcast is expecting more headwinds in the second quarter as the pandemic keeps many businesses closed and people at home.

“Our Cable Communications results, while strong in the first quarter 2020, will be negatively affected in the second quarter by the significant deterioration in domestic economic conditions in recent weeks and by the costs associated with our support of customer connectivity as the population increasingly works and learns remotely from home.”