NBCUniversal CEO Jeff Shell sees “very, very encouraging” early signs from Peacock, but also sees “significant adjustments” being made to the expense side of the Comcast division in light of COVID-19.
Shell delivered those comments during his first appearance on a Comcast earnings call, having taken over as CEO of NBCU earlier this year. He joined other executives speaking to Wall Street analysts after Comcast reported mixed first-quarter results. Shell also addressed the ongoing controversy over theatrical windows and Trolls World Tour. He said premium video on demand releases of select titles remain an option but theatrical remains a “central element” of the studio’s business.
Shell was asked about whether the company is “right-sized” in terms of its expenses. “Probably no,” he said. “We’re spending a lot of time on our cost base and we’ll make significant adjustments.”
No executives uttered the word “layoffs,” but Comcast is among many companies warning investors about second-quarter results due to the pandemic’s direct impact. Theatrical moviegoing, theme parks and sports have all been closed in many countries over the past few weeks. Television advertisers are pulling back significantly, with the lack of college and pro sports already costing networks billions.
Peacock, Comcast’s entrant in the streaming derby, launched April 15 on the company’s Xfinity TV and broadband platforms. A broader national launch on July 15 remains on track, executives confirmed on the call. “It’s very early,” Shell said of Peacock, but results have been “very, very encouraging, particularly the amount of time each person is spending watching” despite the service going live “without a lot of our splashy originals” due to the production freeze.
CEO Brian Roberts said Peacock has exceeded internal projections for monthly active users and average view time, though he did not offer any numbers. Comcast Cable chief Dave Watson said Peacock is showing “high levels of engagement with content.”
Asked why Comcast didn’t accelerate the full rollout of Peacock given the overall boom in streaming during quarantine, Shell said, “We’re in a marathon not a sprint. We’re an advertising-based business. We don’t see the value – we’re not trying to gain subs.” He said the company has a “measured strategy” and the early results have left the management team “encouraged and even more optimistic long term.”
Sports, especially the 2020 Tokyo Olympics, was supposed to offer a massive promotional lift for Peacock and all else at NBCU. But CFO Michael Cavanagh said the company did not incur any losses from the postponement of the games to 2021. He also said Comcast will be able to reduce the cost of sports rights on its 2020 balance sheet because amortization of those costs occurs only when live games air.
Roberts said the fact that European sports leagues, notably soccer, are beginning to schedule practices and should have live action returning in May may provide a model for how things will go in the U.S. Apart from the Olympics, NBCU has not faced daily sports impact that compares with the blows absorbed by Disney, ViacomCBS or AT&T, but the fate of NFL Sunday Night Football – the No. 1 show on television – hangs in the balance.
Roberts invoked his late father, Ralph, who founded the company and was an early cable television pioneer. He said his father’s optimistic streak remains “deep in the DNA” of the company, which is trying to see the silver lining in the clouds filling the sky. “We’ve seen a shift coming in consumer behavior,” he said. “A lot of this was happening before there was COVID.”
While the direction of the broader economy is difficult to predict, Comcast should be able to benefit from increases in people working from home and needing broadband service. “I don’t think we would trade positions with anybody,” he said. “We like our company, we like our hand and we’re going to focus on improving from here.”
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