Comcast (NASDAQ:CMCSA) had a mixed 2015.
On the negative side, the company saw federal regulators refuse to approve its planned acquisition of Time Warner Cable (NYSE: TWC). That deal would have made Comcast the unquestioned leader among pay-television companies and Internet service providers. Losing TWC -- and then seeing rival Charter Communications snap it up -- was a significant setback.
In addition, the company continued to struggle with customer service problems. Those issues led to a number of embarrassing news stories, and ultimately to the company publicly pledging to totally revamp how it handles its interactions with subscribers, at a great expense.
Those negative stories, however, were perhaps outweighed by the good news delivered by Comcast's entertainment properties. Specifically, Universal Pictures had a banner year, with three films -- Minions, Furious 7, and Jurassic World -- exceeding $1 billion in global box office. In addition, the company experienced record attendance at its theme parks, and NBC once again led the primetime ratings pack among the key 18-to-49 demographic.
It was a year that left investors a bit baffled. Despite those strong performances by the movie and theme parks businesses, and the cable/Internet side showing surprising resilience, Comcast stock closed at $56.46 on Dec. 21, slightly below its 2015 opening trading price of $58.
That's likely due to disappointment over the TWC deal being scuttled as well as general market fears about the future of the cable space. Still, stock price aside, 2015 was largely a strong year for Comcast -- but does that set the company up for its best year ever in 2016?
Cinematic successes will be a tough act to follow
While Comcast's Universal Studios had unparalleled success in 2015, it will have a hard time equaling that level of success in 2016. The problem is that its franchises with billion-dollar potential will not be releasing films during the next 12 months.
Even surefire hits like Matt Damon returning as Jason Bourne and Neighbors 2 should deliver closer to $300 million to $400 million based on where the previous films in each series performed. The same could be said of sequels to Snow White and the Huntsman and My Big Fat Greek Wedding.
It's nearly impossible to expect Universal to equal 2015 in 2016, though 2017 might shatter all previous records.
Theme parks remain strong
Universal Studios theme parks had a strong 2015 -- or at least, they've done well in the three quarters the company has reported on so far. For the nine-month period that ended Sept. 30, revenue from its Florida and California parks increased 22.9% to $2.3 billion compared to $1.9 billion in 2014, while operating cash flow increased 31.8% to $1.1 billion.
It's reasonable to expect that the company will build on those numbers due to the launch of a Harry Potter-themed attraction in California and the continued strength of its two Potter "lands" in Florida. But, because theme parks account for such a small fraction of overall revenue ($2.3 billion out of $55.2 billion for the first three quarters) even a similar year-over-year increase won't be a game changer for the company.
Cable, Internet, and television
While the movie business is cyclical, the cable and broadcast end of Comcast faces steady downward pressure. Cord-cutting may not be happening as fast as once was predicted, but it could increase and that's a sword hanging over the company's pay-television business, its cable channels, and NBC.
Comcast has done a good job of increasing its revenue per subscriber and growing its ISP business to offset its dwindling cable subscriber base, and it will likely continue to do that. But there's only so much blood you can get out of a stone. Pay TV and owning networks and cable channels are not likely to be growth businesses in 2016. Providing Internet service might be, but the segments combined will likely tread water at best, or lose a little ground.
It looks to be a good, not great year
Losing the Time Warner Cable deal scuttled any chance that 2016 would be Comcast's best year ever. The company will struggle to match this year's record box office take, and its core pay-television business will likely slowly bleed subscribers. It likely won't be a bad year, but market conditions have simply put too many roadblocks in front of the company.
It's unlikely Comcast's 2016 will equal its 2015, let alone deliver a new record for the company.