According to a recently published Neilsen report, global advertising spending among traditional media rose 8.8% over the year in the first quarter of this year to $118 billion. Growth was driven by TV ad spending and emerging markets. During the first quarter, TV ad spending increased 12% over the year and now contributes a 65.3% market share in both developed and many emerging economies among traditional advertising media. Rising ad spending has helped pushed up the revenue of major cable and television service provides within the U.S.
Comcast’s (NASDAQ:CMCSA) Q1 revenues grew 32% over the year to $12.13 billion, missing the Street’s target of $12.97 billion. EPS of $0.36 grew 16% over the year and exceeded the market’s expectations of $0.34.
Revenue from the company’s Cable segment grew 5.8% over the year to $9.1 billion driven by 50% growth in revenue from Business Services and 10% growth in advertising revenue. At the end of the previous quarter, the number of Comcast’s Triple Play customers grew 3% over the previous year to 49 million. Recently, the company announced that their customers have watched 20 billion entertainment choices On Demand since the service was launched in 2003, setting a record for the industry.
After completing the NBC acquisition following a long legal battle, Comcast is now reaping the benefits by diversifying NBC’s portfolio and improving their content. NBC Universal owns half of the Universal Orlando theme parks, and Comcast is evaluating plans to pay $1 billion to $1.5 billion to become the sole owner of these parks. Comcast also added to their content library. NBC recently announced that it won the U.S. television rights to the 2014 winter Olympics in Russia, the 2016 summer games in Rio de Janeiro, and the 2018 and 2020 games. The rights to the games have come at an expensive price tag of $4.38 billion.
Comcast Expands to Video Chat
Additionally, Comcast is working on furthering the cable industry’s reach within a consumer’s home. They announced plans to introduce Skype video chat to customers through their TV sets. Comcast will provide a special kit with Skype software, an HD video camera, an adaptor box, and a remote control with a keyboard so that Comcast subscribers will be able to make or receive video and audio calls apart from being able to send text messages to other Skype users. Comcast customers will be able to make Skype calls and send instant messages while watching TV. Users will also be able to import their friends list from social media sites such as Facebook and from their e-mail inbox and smartphone contact list to their Comcast address book. A trial of the service will be done this year with a formal launch scheduled for next year. Financial details of the deal were not disclosed.
Comcast’s stock is trading at $23.93 with a market capitalization of $66 billion. It touched a 52-week high of $27.16 in May of this year.
Viacom’s (NASDAQ:VIA) Q2 revenue grew 20% over the year to $3.27 billion and were ahead of the market’s expectations of $2.98 billion. EPS of $0.72 was higher than the Street’s expected $0.62.
By segment, media networks revenue grew 11% over the year to $2.08 billion driven by the popularity of their MTV shows “Jersey Shore” and “16 and Pregnant,” high viewership at Nickelodeon, and prime-time audience gains at BET. Higher ad revenue also helped: U.S. advertising revenue grew 11% and worldwide ad sales 12%. Theatrical revenue grew 50% to $401 million because of the continued success of the company’s earlier releases, “True Grit” and “The Fighter.” Home entertainment revenue grew 38% to $410 million and television license fees were 30% higher at $336 million. Combined revenue for the movie studio unit increased 38% to $1.23 billion.
Viacom Sharpens Focus on Kids Segment
Sharpening their focus on children’s entertainment, Viacom recently released the Victorious product line exclusively at Walmart. The company will retail more than 250 Victorious-themed products, including apparel, accessories, entertainment, and school supplies at Walmart stores. Additionally, Viacom is planning to launch of Paramount Animation. The in-house animation studio is expected to release its first title in 2014 and will be working on creating high-quality animated films with budgets of more than $100 million each.
The stock is trading at $55.42 with a market capitalization to $32.43 billion. It touched a 52-week high of $60.90 in May of this year.