NBCU CEO: Ad Market Is “Choppy” But We’re Feeling “Really Good” About Theme Park Business

Jeff Shell, CEO of Comcast’s entertainment unit NBCUniversal, discussed latest advertising and theme parks trends amid economic clouds during the conglomerate’s second-quarter earnings conference call on Thursday. But just like in the case of rising inflation and other economic concerns, the picture remains somewhat unclear.

Asked about the macro-economic trends’ impact on advertising, Shell said, “the advertising market is choppy … Some segments are doing better, some segments are doing worse.” The TV upfront was “way better than we expected” for the company, he emphasized. “So, definitely some choppiness, but nothing really that dramatic,” he concluded.

Asked to explain what “choppy” means some more, Shell said: “What I mean by choppy is that there is not a broad decline or increase.” He emphasized that second-quarter media unit ad revenue, excluding the NHL playoffs aired by the company in the same period of 2021, was “actually up in the quarter, which I think is better than some of the other companies that have reported so far.”

In the scatter ad market, for example, auto spending is down because of a lack of new cars on lots, while the pharma industry is spending strongly, he added.

Management on the call touted more than $7 billion in commitments in the TV advertising upfront that the company previously lauded as its highest-grossing ever.

Asked about NBCU’s theme parks, Shell said that the business has traditionally been subject to economic impacts, but the company hasn’t seen any of that yet. “I think we feel really good about the parks and feel like there is a lot of growth ahead of us despite what could be macro challenges that we could or might face; we just haven’t seen it yet.”

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Wall Street analysts went into the latest earnings season with a focus on color commentary and forecasts amid high inflation and a broader gathering of economic storm clouds that has led some to express concern about a looming recession, which would hit advertising revenue. “The pivot to streaming has not reduced the risk to media estimates from a slowing economy,” Morgan Stanley analyst Benjamin Swinburne warned in a July 18 report. 

“We decrease our second-quarter NBCU revenue to $8.9 billion from $9.0 billion, primarily driven by lowered advertising expectations as we think the scatter market began to weaken in the back-half of the quarter,” Wells Fargo analyst Steven Cahall wrote in his earnings preview report. “Additionally, we think NBCU will become a larger focus in the second half of 2022, as we’ve heard reports of softness in the scatter market along with continued concern of a weakening consumer. As such, we reduce our second-half core ad revenue at NBCU by 5 percent compared our prior estimate and reduce 2023 core ads by 8 percent. We also take down our 2023 theme parks revenue by 7 percent to $6.9 billion.”