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As more competitors enter the advertising-supported streaming space, including Netflix and Disney, Peacock executives believe the platform remains in a leadership position.
Speaking at Bank of America Securities 2022 Media, Communications & Entertainment Conference Thursday, Armstrong cited the $7 billion NBCUniversal brought in at the recent upfronts, with $1 billion of that going to Peacock as evidence.
He also addressed the company’s reported consideration as an advertising partner for Netflix, citing it as a signal of Comcast’s strength in advertising technology and saying that the company was “near the top” of Netflix’s list, but “may not have been willing to write the biggest guarantee around it.”
This view even after Peacock saw its subscriber base stall in the second quarter. After ending the first quarter with more than 13 million paid subs and 28 million monthly active accounts in the U.S., the company said in late July that paid subs “stayed relatively flat at 13 million” as of the end of June “following a very strong first quarter that was driven by a variety of extraordinary programming,” including the Super Bowl and the Beijing Winter Olympics, leading to a gain of 4 million paid subs.
On Thursday, Armstrong called the second and third quarters “retention quarters” for the streaming service, with growth expected to pick up again in the fourth quarter thanks to the return of more content, including NFL football in the U.S. and the English Premier League.
Asked whether the company would consider licensing its content to third parties, Armstrong said NBCUniversal will prioritize Peacock and then linear but that “third party will play a role.”
“The demand for content has never been higher,” Armstrong added.
Overall, Armstrong said NBCUniversal views Peacock as “an extension” of the company’s overall business and a way to make up for its shrinking linear audience.
“The goal is you come out the other side and this is an accretive business and it rounds out the video portfolio,” he said.
Comcast recently disclosed that its broadband user gains came to a halt in the second quarter amid growth challenges across the cable industry, even though most analysts had expected slight gains from Comcast. The company’s total broadband customer base of 32.2 million was flat compared to the first quarter of 2022; for the year-ago period, it had reported total broadband customer net additions of 354,000. On its earnings call, Comcast said that as of late July, early in the third quarter, weaker broadband user trends had continued — with losses quarter-to-date having reached around 30,000 — but added that July is typically a weak month before back-to-school activity kicks in.
Comcast recently also restated its previous guidance that Peacock’s earnings before interest, taxes, depreciation and amortization (EBITDA) loss would come in around $2.5 billion for 2022, with losses being higher in the back half, especially in the fourth quarter.
Bloomberg recently reported that NBCUniversal CEO Jeff Shell has looked at possibly cutting as much as $1 billion from the budget of its broadcast and cable TV networks that could be invested into Peacock, theme parks or other growth businesses.
With M&A speculation swirling around the entertainment industry, Comcast chairman and CEO Brian Roberts had reiterated in late July that the bar for acquisitions was “very high” for his team. Asked during the second-quarter earnings conference call how he feels about the assets of the conglomerate, he said: “We are in a fabulous place,” adding, “We have unprecedented cash flow and scale” with a company whose various businesses are working “really well together.” In terms of possible acquisitions, “our bar is therefore very high,” he concluded. “I am really pleased with the company.”
Armstrong held to that view Thursday, saying the company’s investment priorities remain largely in-house, with planned spending on the company’s broadband network, business services, parks business and its streaming platform.
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