Peacock’s $614 million third-quarter loss looks quaint next to this massive write-off
Peacock lost $614 million in the third quarter of 2022. That’s a giant number – even for Peacock – it’s just not as giant as Sky’s $8.6 billion delisted parent company Comcast.
Four years ago, Comcast outbid Fox to buy Sky for $39 billion. The deal is definitely inconclusive.
More from IndieWire
In Q3 2022, Comcast recorded “non-cash impairment charges related to goodwill and intangible assets” in the Sky segment. An impairment charge is a write-off, and goodwill essentially means the loss of value of an asset. Simply put, Sky has proven to be nowhere near as valuable as Comcast once assumed.
Comcast attributed the writedowns to “an increased discount rate and reduced estimate of future cash flows.” Why? “Macroeconomic conditions in Sky territories,” wrote Comcast’s army of accountants. In other words, inflation and unflattering currency fluctuations couldn’t have come at a worse time for this particular investment.
“At Sky, our team continues to cautiously manage a challenging and rapidly changing macro-economic and geopolitical period in the UK and Europe,” said Brian L. Roberts, Chairman and CEO of Comcast, in a statement accompanying the statements. financial.
Better to be even more careful.
Fortunately, Comcast CPAs are able to adjust these write-offs from the adjusted net earnings and adjusted earnings per share (“adjusted” being the operative word here) line items, which are what the media typically focuses on. Without this adjustment, Comcast lost $1.05 per share; with it, shareholders earned 96 cents for every share they held. It’s a big swing. Overall, the company’s net loss with depreciation was -$4.6 billion; with it, Comcast made a healthy profit of $4.2 billion.
These adjustments are very significant in another way. Wall Street expects Comcast earnings per share (EPS) to be 90 cents on revenue of $29.65 billion, according to a consensus compiled by Yahoo Finance. With Sky’s massive delisting, Comcast was able to beat the earnings estimate; it also topped revenue with $29.85 billion in total. Adjusted earnings were up 10% (adjustments are the best, right?) compared to the third quarter of 2021, although revenue was down 1.5%.
Sky’s earnings give an idea of the poor performance of foreign currencies. While revenue fell nearly 15%, revenue at constant currency was virtually unchanged from the same quarter last year. The British satellite broadcaster’s business has been helped a little by reducing capital expenditure (funds used for physical assets, such as buildings or equipment) by almost 40%.
Overall, Sky’s operating costs fell by 11.5%, but unfavorable exchange rates meant that expenses rose by 3.5% at constant exchange rates. Sky’s EBITDA (earnings before interest, tax, depreciation and amortization) fell nearly 28%, or -15.5% if you exclude the monetary part of the problem.
This all sounds really bad, but it’s not totally unexpected. In a Thursday morning note to investors, Wells Fargo applauded EBITDA beating analysts’ expectations. And Sky’s revenues were just 3% less than forecast. Could be worse.
Overall, Wells Fargo called the third quarter a “strong operating quarter” for Comcast. NBCUniversal exceeded estimates, and cable did what it needed to do.
As for Peacock, Comcast didn’t have much to say beyond the loss of more than half a billion that it attributed to the struggling streaming service. Comcast reported that Peacock crossed 15 million paying subscribers in the third quarter, but we already knew that.
Best of IndieWire
Sign up for the Indiewire newsletter. For the latest news, follow us on Facebook, Twitter and Instagram.
Click here to read the full article.