News Information and Media Site: Byers Market: Big Four report earnings during pandemic

July 31, 2020

By AHIZA GARCÍA-HODGES in San Francisco

& DYLAN BYERS in Healdsburg, Calif.

Good morning. ☀️ Starting Monday, Dylan's back! He'll retake the lead on the newsletter, but I'll continue to contribute daily pieces while reporting for our main news site like before. Thanks for reading while I was at the helm; we both really appreciate all of you!

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💰 Earnings roundup

Big Four report earnings during pandemic

Moving the Market: Jeff Bezos, Tim Cook, Sundar Pichai and Mark Zuckerberg reported quarterly earnings Thursday and all managed to beat expectations, showing the state of their companies and how they're managing to weather the coronavirus pandemic.

• The results:

Jeff Bezos reported soaring sales and profits this quarter, driven in large part by increases in online shopping due to pandemic-related stay-at-home orders. Amazon's revenue rose 40% to $88.9 billion.

Tim Cook reported a historically strong third quarter for Apple, with revenue up nearly 11 percent to $59.7 billion despite disruptions caused by the coronavirus, which forced retail store closures. Apple also announced a four-for-one stock split.

Sundar Pichai beat Wall Street's expectations for its second quarter earnings but it wasn't enough to keep Alphabet, Google's parent company, from reporting its first ever revenue decline, down 2% to $38.3 billion.

Mark Zuckerberg reported Facebook's slowest revenue growth since its 2012 IPO, but it still surpassed analysts' estimates. Revenue grew 11 percent to $18.7 billion. Monthly users across its family of apps rose to 3.14 billion from 2.99 billion in the previous quarter.

The big picture: These results cap a major week for these CEOs, who continue to face intense scrutiny from Congress and other federal and state entities over their power and market share. On Wednesday, all four of them reassured Congress they didn't have too much power.

• The increased analysis of these companies comes as the pandemic shows just how much Americans rely on them to buy essential items, stay connected and communicate with other people.

• These four companies and Microsoft are the five most-valuable publicly traded companies on the S&P 500. The results "are validation for [those] who have bet the tech giants would emerge from the pandemic stronger than the rest of the market," Bloomberg's Lu Wang and Sarah Ponczek write.

What's next: This is their first full quarter that took place during the pandemic, which is far from over as the U.S. continues to deal with new cases. While tech is expected to do better than other industries, it's unclear what better will look like if society doesn't reopen soon.

📱 Delayed Release 📱

Tim Cook will be releasing this year's supply of new iPhone models a few weeks later than when they usually go on sale in late September. Some of the models in this year's debut are expected to support 5G technology, Axios' Ina Fried writes.

• "The move means some revenue that typically comes at the end of September won't come until the final quarter of the year, but also reassures investors and customers that the delay won't be longer."

Bloomberg/Getty

📺 HBO (for) Now

Jason Kilar, Jeff Bezos can agree on this

Big in the Bay: "Amid the stalled talks between Amazon and WarnerMedia over getting HBO Max on Fire TV devices, the two sides reached an agreement on one front, at least: Fire TV users who subscribe to HBO Now will continue to be able to access the service, which is being rebranded simply as HBO, as of Aug. 1," Variety's Todd Spangler writes.

• WarnerMedia is dealing with disagreements with both Amazon and Roku over their distribution of HBO Max, which launched on May 27.

The big picture: WarnerMedia wants HBO Max to be offered as a standalone service, similar to how Netflix and Hulu are offered on platforms like Amazon Fire and Roku. In other words, HBO doesn't want its content aggregated into the platforms as channels, but rather offered as a separate service with its own app.

• The disagreements "revolve around revenue splits, as well as asks from Amazon and Roku for ad inventory [and] licensed content from WarnerMedia for their free-streaming services."

What's next: There have been 4.1 million activations of the HBO Max app thus far. Both Amazon and Roku each have over 40 million active users. That means that until WarnerMedia reaches deals with them, it'll be unable to reach millions of potential HBO Max users.

Market Links

• Jimmy Pitaro faces college sports crisis (Bloomberg)

• Tim Cook confirms delayed release of new iPhones (Axios)

• Doug McMillon continues fight with Jeff Bexos on new front (The Information)

• Zhang Yiming now faces patent infringement claim (THR)

• Ellen DeGeneres addresses allegations (Deadline)

Alberto E. Rodriguez/Getty

🦚 Streaming wars

Jeff Shell reports Peacock boom

Talk of TV: NBCUniversal CEO Jeff Shell reported in second quarter earnings on Thursday that Peacock, one of the newest streaming platforms, has added more than 10 million signups since its launch.

The big picture: "The news underscores the high interest in at-home entertainment at a time when consumers are staying home and movie theaters in most regions are closed," our colleague Claire Atkinson writes.

• "The coronavirus pandemic is boosting growth" for streaming services, which in turn "appear to be weakening the traditional cable TV business." Comcast reported a loss of 477,000 video subscribers in the quarter but added 323,000 internet customers. (Comcast is the parent company of NBCUniversal, which owns NBC News.)

What's next: Peacock is one more way Comcast is working to boost its broadband business. As we reported Wednesday, its movie studio, Universal Pictures, made a deal with AMC that will let it stream films on demand much sooner after they debut in theaters than before.

Bloomberg/Getty

⚾️ Credit due

Brian Roberts gives back

Talk of Sports TV: Comcast CEO Brian Roberts plans to refund the programming fees that cable subscribers paid in the second quarter for regional sports networks that air Major League Baseball games.

• The rebates, which will likely show up as credits on future bills, are Comcast's way of sticking to its pledge to pass along adjustments or credits it gets from regional sports networks for games that weren't played because of the pandemic. (Comcast is the parent company of NBCUniversal, which owns NBC News.)

• "Contracts with regional sports networks often hinge on the number of live sporting events they show over a defined period of time. The majority of baseball games are broadcast in regional fashion, not on a national outlet like ESPN or Fox Broadcasting," Variety's Brian Steinberg writes.

The big picture: The move may put pressure on some of Comcast's competitors to offer rebates to their customers and could increase scrutiny on the cable and satellite industry. As MLB struggles with a COVID-19 outbreak would viewers be exempt from paying part of the programming fees if their home teams are sidelined?

What's next: MLB continues to have to postpone games as it deals with new COVID-19 cases in its bubble-less plan to start play.