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Analysts eye NBCU theme parks, Peacock performance ahead of Comcast earnings

When it comes to NBCUniversal Media LLC's second-quarter performance, analysts will have their ears tuned to commentary on its theme parks and streaming businesses.

Comcast Corp. CFO Michael Cavanagh said at a recent industry conference that NBCU's theme park segment would absorb a $500 million blow in the second quarter if there was no attendance whatsoever during the period. The outlook improved somewhat as some properties reopened, including Universal Orlando Resort in early June. But it will be important to learn whether attendance was enough for the segment to break even.

"We got to get to say, 20%, 30% of typical attendance ... and then the [$500 million] becomes zero," the CFO said. "We're not there yet."

Moody's analyst Neil Begley said in an interview that NBCU may be ahead in regaining some theme park guests due to earlier openings, but it will be "a long time before Universal and The Walt Disney Co. return to their usual levels."

NBCU's theme parks had already been impacted by COVID-19 from the first-quarter shuttering of Universal Studios Japan, Universal Orlando Resort and Universal Studios Hollywood. Segment revenue receded 32% year over year to $869 million, as operating income plummeted 85% to $76 million.

Analysts on the July 30 earnings call also will look for information about streaming service Peacock, which became available to Comcast subscribers on April 15 and launched nationally three months later. Specifically, they want to know if any progress has been charted toward securing carriage on Roku Inc. and Amazon.com Inc.'s leading digital platforms.

"Consumers must have access to Peacock on Roku and Amazon to build its subscriber base and share," said Patrice Cucinello, Fitch Ratings' director of technology, media and telecommunications research, in an interview.

Spartan Capital analyst Barry Sine wrote in a note that the carriage negotiations are not only about financial terms, but also "the sharing of viewership data, and even how the new apps will be displayed in Amazon’s case."

Begley pointed out that at this point, Peacock only has gained carriage on one other traditional distributor, Cox Communications Inc.

Ad sales metrics for Comcast's systems and NBCU's broadcast and cable networks are expected to be down significantly during the second quarter, as well.

Macquarie analyst Tim Nollen noted that sports ad sales for NBC (US), NBCSN (US) and Golf Channel (US) were negatively impacted by postponements of golf tournaments, the French Open tennis championships, two legs of thoroughbred horse racing's Triple Crown, the Indianapolis 500 and the NHL's Stanley Cup Playoffs.

Nollen forecasts with the NHL's scheduled restart on Aug. 1, NBC Sports could reclaim $90 million to $100 million in league ad revenue in the third and fourth quarters.

Investors and media and advertising communities also are interested in hearing any details on hard premiere dates for NBC’s fall prime-time schedule, as well as the number of episodes broadcasters can deliver in the 2020-21 TV season as production slowly resumes.

Clarity about the networks' fall schedules is one reason the upfront market — during which content companies look to sell advertising packages in their linear and digital schedules to agencies and their clients ahead of the upcoming TV season — has been slow to develop.

"The networks need the ad dollars, but the agencies want more flexibility in terms of cancellations, make-goods and guarantees across the various offerings," Nollen noted.

Meanwhile, the disruption of theater openings in the U.S. and around the globe has resulted in the rescheduling of premieres for expected blockbusters and alternative delivery and debuts for other films.

Cucinello believes that the longer the pandemic extends, there will be even more premium video-on-demand and streaming debuts, as the media companies look to generate revenue.

From a traditional box office standpoint, Nollen forecasts that NBCU’s revenue, which would have been boosted by the scheduled May 23 opening of the latest Fast & Furious film, will likely be near zero in the second quarter. NBCU’s filmed entertainment unit saw its top line retreat 22.5% to $1.37 billion in the first quarter.

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