Comcast stock falls 12% after company underwhelms in broadband, Peacock subscribers

Comcast topped Wall Street's fourth-quarter estimates Thursday despite reporting larger-than-expected broadband subscriber losses and stagnating paid subscribers for its streaming service, Peacock.

Wall Street has been particularly focused on cable companies' broadband businesses, which still garner high revenue and earnings but have been in the midst of a customer growth slump due to heightened competition from wireless companies, among other factors.

At the same time, streaming has been top of mind for the Street. Although profitability is now considered the key measure of success, investors have taken note of recent subscriber additions by major players since the introduction of cheaper, ad-supported tiers.

Comcast reported Thursday that it lost 139,000 residential broadband customers during the fourth quarter, more than the 100,000 losses that Comcast Cable CEO Dave Watson had telegraphed in December during an investor conference.

Comcast President Mike Cavanagh on Thursday's investor call said the broadband losses were "disappointing and worse than what we indicated in early December."

The company also reported Thursday that Peacock had 36 million subscribers during the most recent quarter, up year over year but flat from the prior period. Wall Street had been looking for total paid subscribers of 37.56 million, according to estimates from StreetAccount.

Comcast shares were down more than 12% in mid-morning trading.

Here is how the company performed for the quarter, compared with average analyst estimates from LSEG: 

For the quarter ended Dec. 31, net income attributable to Comcast rose roughly 47% to $4.78 billion, or $1.24 per share, compared with $3.26 billion, or 81 cents per share, a year earlier. 

Adjusting for one-time items, including interest expense and the value of certain assets, Comcast reported earnings per share of 96 cents for the period. 

Adjusted earnings before interest, taxes, depreciation and amortization was up about 10% to $8.81 billion. 

In addition to higher broadband revenue, Comcast's overall revenue was up 2% to $31.92 billion, thanks to an increase in segments including its mobile business, the film studio and revenue growth at streaming service Peacock. During the fourth quarter of 2023, Comcast reported revenue of $31.25 billion. 

Despite the slowdown in cable industry broadband customer growth, the business is a key driver on balance sheets like Comcast's as average revenue per user has risen. 

Broadband is part of Comcast's Connectivity and Platforms segment, which also includes Xfinity Mobile wireless, which was launched in 2017. The company surpassed 7.8 million mobile lines, and revenue from the unit helped propel overall residential connectivity revenue. 

Comcast executives Thursday said the company would shift focus to the mobile business in a push to add more lines and further bundle it with broadband. Watson said Thursday the company will "put the pedal down" on the mobile effort in the second quarter.

Comcast lost 311,000 cable TV customers during the fourth quarter. 

Meanwhile, revenue for the company's Content and Experiences business, which includes NBCUniversal's TV networks and streaming, the film studio and theme parks, was up 5% to roughly $12.08 billion during the fourth quarter. 

Revenue for the media segment, which includes the TV networks, was up 3.5% to about $7.22 billion, namely due to higher revenue for Peacock due to an uptick in paid subscribers on the platform from the prior year. Overall domestic advertising for the media segment was flat as ad dollars for Peacock increased but the TV networks saw a smaller haul. 

The media segment reported $298 million in adjusted EBITDA, falling short of Wall Street expectations of $317.1 million for the quarter, according to StreetAccount estimates. The rest of the businesses in the content and experiences segment beat StreetAccount estimates, including overall adjusted EBITDA.

In November, Comcast announced it would spin off its cable network channels, a portfolio that includes CNBC, MSNBC, E!, Syfy, USA, Oxygen and the Golf Channel. The separation, which will also include digital assets such as Fandango and Rotten Tomatoes, is expected to take about a year. The NBC broadcast network, cable channel Bravo and Peacock will remain with Comcast.

Peacock has been moving toward profitability in recent quarters. On Thursday, Comcast reported Peacock had $1.3 billion in fourth-quarter revenue and an adjusted EBITDA loss of $372 million, compared with $1 billion in revenue and an adjusted EBITDA loss of $825 million in the same period last year. 

Peacock's subscriber growth often rises on the back of major live sporting events on the platform. The Summer Olympics in Paris was a key driver in the third quarter, when the platform added 3 million subscribers. Exclusive NFL games have helped pad the streamer's numbers, and the company has touted the addition of the NBA and WNBA next season.

Universal Studios' revenue was up 6.7% to $3.27 billion, and the segment's adjusted EBITDA was up 85% to $569 million, boosted by the box office successes of films including "Kung Fu Panda 4," "Despicable Me 4," "The Wild Robot" and "Wicked." 

Meanwhile, Theme Parks revenue was flat as lower attendance persisted at domestic locations. 

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.