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Peacock's 22 million sign-ups reflect appeal of soccer, NBC news, library fare

NBCUniversal Media LLC's streaming service Peacock is pacing ahead of projections, with 22 million sign-ups so far.

NBCU CEO Jeff Shell told analysts on parent Comcast Corp.'s Oct. 29 earnings call that the majority of the service's revenue is coming from advertising. Peacock launched on April 15 to Comcast customers and became available nationally three months later.

Peacock offers free access to more than 13,000 hours of current, classic and original movies and shows, as well as access to live and on-demand news, sports, reality, late-night and Spanish-language content. In addition to the free content offering, a premium version with additional content is available for $4.99 per month, or $9.99 per month for an ad-free version.

NBCU is tracking Peacock's monthly active accounts and cable accounts, and how often the service is being used, to calculate engagement. "Those 22 million serve as the top of the funnel, and we're way ahead on the other two of what we projected to be," Shell said.

He also highlighted NBCU's recent deal with distributor Roku Inc. to carry Peacock, noting that the subscriber effects of the deal are starting to kick in.

Shell said Peacock programming is resonating across genres. He pointed, for example, to coverage of the Premier League, the U.K.'s top soccer circuit, NBC News' fare, and licensed products, including the Paramount Network (US) hit series "Yellowstone." Library fare is also drawing viewers, as many want to rewatch episodes of sitcom "30 Rock" and content from producer Dick Wolf's vast portfolio, Shell said.

Looking ahead, Shell said Peacock's offerings will grow as more originals are on tap. Comedy "The Office" will migrate from Netflix Inc. to join Peacock's lineup exclusively in January 2021, ahead of the Tokyo Olympics next summer, to which NBCU holds TV rights.

Shell, in response to a query about whether NBCU has enough scale to compete in the direct-to-consumer arena against Netflix, Inc.'s Prime Video and The Walt Disney Co.'s array of services, said the company has the best platform and a strong content pipeline.

"When you think about direct-to-consumer across our company, it's not just Peacock, but Comcast and Sky Ltd. both have deep, broad customer relationships," he said. Comcast Chairman and CEO Brian Roberts earlier on the call said Peacock is fueling growth for the company's broadband business.

NBCU's third-quarter revenue declined 18.9% to $6.72 billion from just under $8.30 billion in the prior-year period. Adjusted EBITDA receded 38.7% to $1.28 billion during the three months ended Sept. 30 from $2.09 billion.

Theme-park revenue plummeted 80.9% to $311 million in the face of the pandemic, which limited capacity at Universal Orlando Resort and Universal Studios and has kept Universal Studios Hollywood shuttered. The theme park segment posted an adjusted EBITDA loss of $203 million, versus profits of $731 million in the year-earlier period.

Filmed entertainment revenue declined 25.0% to $1.28 billion as theatrical revenue plummeted 94.7%, primarily driven by COVID-19-induced theater closures. Content licensing revenue grew 14.5%, owing to the timing of deals, including transactions with Peacock, while home entertainment revenue surged 49.1%, boosted by "Trolls World Tour." The film unit saw adjusted EBITDA improve 53.4% to $300 million, as the lower revenue was more than offset by a decline in operating costs.

Cable networks revenue slipped 1.3% to $2.74 billion even as content licensing and other revenue rose 16.6% behind the timing of transactions, including deals with Peacock. Distribution revenue dropped 3.8% stemming from credits accrued at some of the company's regional sports networks, which provided fewer professional sports games in deference to the pandemic's live-event cancellations as well a decline in subscribers, partially offset by contractual rate gains. Ad revenue dropped 2.1%, owing to continued ratings declines, partially countered by revenue rescheduled sporting events, delayed by the pandemic.

Adjusted EBITDA for cable networks decreased by 8.9% to $870 million.

Broadcast television revenue advanced 8.3% to $2.41 billion, buoyed by a 65.6% jump in content licensing revenue and distribution and other revenue, including transactions with Peacock. Distribution and other revenue increased 4.9%, due to higher retransmission-consent fees. However, advertising revenue decreased 11.5%, reflecting continued ratings declines, partially offset by higher pricing and local political ad sales.

The broadcast segment's adjusted EBITDA increased by 28.7% to $436 million in the third quarter of 2020.

All told, Comcast's third-quarter revenue declined by 4.8% to $25.53 billion from $26.83 billion in the prior-year period 37.2%. Net income attributable to the company for the quarter was $2.02 billion, or 44 cents per share, compared to net income of $3.22 billion, or 70 cents per share.

The S&P Capital IQ EPS consensus estimate for the quarter was 42 cents on a GAAP basis and 51 cents on a normalized basis.