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How Did Comcast’s Filmed Entertainment Segment Fare against Peers?

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Theatrical distribution a major contributor to revenue

On February 17, 2016, The Hollywood Reporter reported that Comcast’s (CMCSA) NBCUniversal’s Universal Pictures has entered into a five-year agreement with Perfect World Pictures, a Chinese company, to finance Universal movies. According to the report, under the terms of the agreement, $500 million would be raised through a combination of equity and debt to finance Universal Pictures films.

The Filmed Entertainment segment’s Universal Pictures had its most profitable year in 2015. As the graph below shows, theatrical distribution comprised 39%, or $2.8 billion, of Comcast’s NBCUniversal Filmed Entertainment segment’s total revenues of $7.3 billion in fiscal 2015.

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Filmed Entertainment in fiscal 2015

This segment had an operating cash flow of $1.2 billion, which represents a rise of 74% over fiscal 2014. Universal Pictures movies including Jurassic World, Furious 7, and Minions drove revenue growth for this division, and this segment had revenues of $1.6 billion in 4Q15, which was up by 25.8% over 4Q14. In 2016, Universal Pictures will not have as strong a slate as in 2015, but the company notes that it still has a “strategic slate of core franchises, sequels and animated films.”

How did this segment fare against peers?

By contrast, Twenty-First Century Fox’s (FOXA) filmed entertainment segment saw revenues of $2.4 billion in fiscal 2Q16—a decline of $392 million over fiscal 2Q15—and OIBDA (operating income before depreciation and amortization) of $302 million, which was down $34 million, or around 10%, from its OIBDA in fiscal 2Q15. The company’s filmed entertainment revenues in fiscal 2Q16 were negatively impacted by the strong US dollar and a fall in revenues from the company’s Home Entertainment segment.

The Walt Disney Company’s (DIS) Studio Entertainment segment saw revenues of $2.7 billion in fiscal 1Q16, which was up by 46% year-over-year. This growth in revenues was largely driven by the success of the new Star Wars movie.

Comcast makes up 2.9% of the PowerShares QQQ ETF (QQQ). For investors interested in getting exposure to the television and radio sector, QQQ has 4.9% exposure to TV and radio, with 0.78% in Netflix (NFLX).

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