Peacock’s feathers will be bright – but expensive

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Comcast unveiled its Q4 numbers on January 23rd, and reported earnings rising an extremely healthy overall 26 per cent helped by broadband growth. The downside drag was its entertainment unit NBCUniversal as well as miserable box office revenues for its latest movie, Cats, and a 49 per cent fall in its film unit’s profits.

Chairman/CEO Brian Roberts used his presentation in part to caution that pay-TV losses this current year would be under pressure with (for 2019) net losses of 733,000 against the 2018 picture of 370,000 cancelled subscribers.

Craig Moffett from MoffettNathanson (MN) in their analysis of Comcast’s performance said that Comcast had already signaled that the need to invest in their new streaming service Peacock, “as they simultaneously pay down debt from their Sky acquisition, will mean suspending share repurchases for the year (although, to be fair, they did announce this morning that they are raising their dividend by a healthy 10 per cent).”

“Peacock will weigh on NBCU in more ways than just incremental spending. Peacock and its peer DTC streaming services (Disney+, HBO Max, and Apple TV+, to name only the three most prominent) will accelerate the erosion of the legacy media ecosystem from which they are born,” added MN.

MN reminds clients that Peacock will be something of a sideshow for the next few years although no doubt with every colourful feature compared and contrasted with its farmyard full of rivals. “In fact,” says MN, “Peacock isn’t even the key to what happens at NBCU – that’s still cable networks and broadcast retrans. What happens at Sky will also be much more important than whether Peacock does or doesn’t meet its relatively modest ambitions.”

“Fortunately, their cable business is still doing very, very well (even if yielding to the temptation to crow about results a week before they’re reported is more often than not unhelpful). Unfortunately (for investors, at least), Cable is only half of Comcast. And the other half of Comcast, for which Peacock is but a welcome distraction, isn’t quite as healthy,” added MN.

Separately, Enders Analysis suggested one route forward for Peacock would see it make reciprocal deals with other pay-TV operators. For example, permitting HBO Max on Comcast while Peacock gains carriage on AT&T. Enders also suggests that in Europe, where Comcast has no existing major free-TV offering to transition, launching Peacock will be challenging but could present Sky with ideas to counterweigh Netflix on its own service.


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