Comcast Corporation (CMCSA) Q2 2015 Earnings Preview: ‘Furious 7’ Fuels Universal Hot Streak, But Cord-Cutting Continues

Comcast Corp. reports second-quarter earnings Thursday before the opening bell, and despite a tumultuous three months that included a failed merger, low ratings for NBC and a projected exodus of more pay-TV subscribers, the cable and media giant is expected to show double-digit profit growth for the 15th consecutive quarter.

In April, Comcast announced that it was abandoning its proposed takeover of Time Warner Cable Inc. after more than a year of effort. The $45 billion deal raised red flags with federal regulators concerned about giving one company control over too much of the U.S. broadband market. While the withdrawal could be viewed as a defeat, some analysts say it means Philadelphia freedom for Comcast, hereafter unfettered from the shackles of the cumbersome merger review process.

“Now that Comcast has terminated its proposed acquisition of TWC, we believe Comcast will focus on its core operations,” Vijay Jayant, an analyst with Evercore ISI, said in a research note this month. “We believe Comcast continues to execute well and grow its customer base, largely driven by broadband net additions.”

Wall Street expects Comcast’s quarterly net income to rise to $2.1 billion, compared with $2 billion for the same three-month period last year. Earnings per share are expected to jump 10.8 percent to 84 cents, compared with 76 cents last year. Revenue is expected to rise 7.7 percent to $18.14 billion, compared with $16.84 billion last year, according to a poll of analysts from Thomson Reuters.

Movies Still Matter

The big success story for Comcast this quarter is the box-office domination of Universal Pictures, part of Comcast’s NBCUniversal division. From fast cars to dinosaurs to little yellow minions, the studio has been churning out one big-screen hit after another this spring and summer. Domestic box-office gross is expected to grow a staggering 469 percent in the second quarter, compared with the same period last year.

“Furious 7,” released on April 3, far exceeded box-office projections with a worldwide gross of $1.1 billion. “Jurassic World,” released June 12, is so far the highest-grossing movie of the year, with a global total of more than $1.5 billion, according to Box Office Mojo. The dinosaur blockbuster is on track to be the third-highest-grossing movie of all time, behind James Cameron’s “Avatar” and “Titanic.”

All of this comes during another challenging quarter for the television industry, which has been plagued by ratings woes that have stabilized somewhat since earlier in 2015, though ratings are still down significantly compared with 2014. On Comcast-owned NBC, prime-time viewership in the key 18-49 age demographic was down 14 percent compared with the same period last year, according to an analysis of Nielsen data cited by Michael Nathanson of MoffettNathanson LLC. The picture wasn’t much better across NBCUniversal’s suite of cable networks, which saw total-day demo viewership decline 12 percent.

In a recent research note, Nathanson joked about the unlikelihood of the movie industry, long thought to be in decline, saving the traditionally profitable television industry. “You know you’re in trouble when the only positive media data point in the quarter is the U.S. box office,” Nathanson wrote in a July research note.

Comcast’s theme parks division was another bright spot for the quarter, with revenue expected to jump 13.4 percent, according to Evercore.

Video’s Vanishing Act

The cord-cutting trend continues to be an issue for Comcast, although the second quarter is traditionally a weak season for pay-TV. Analysts expect cable companies to post a net loss of 355,000 video subscribers for the quarter, with Comcast’s share being about 120,000, according to MoffettNathanson. That’s still better than the same quarter last year, when Comcast shed 144,000 and the sector combined lost 533,000.

Still, pay-TV subscriber growth peaked in 2007, and even as new-household formation has been on an upswing, analysts are not expecting a return to pre-crash numbers anytime soon. Broadband, on the other hand, is another matter -- Comcast is expected to show a net gain of about 221,000 broadband subscribers. But analysts say the cable industry’s increasing reliance on high-speed Internet will create new challenges in the long term. “Pressure on video means greater emphasis on broadband,” Nathanson wrote. “[A]nd broadband pricing is a regulatory question, not a competitive one, making it uniquely challenging to analyze and forecast.”

Comcast reports financial results on Thursday, July 23. A conference call is scheduled for 8:30 a.m.

Christopher Zara is a senior writer who covers media and culture. News tips? Email me. Follow me on Twitter @christopherzara.