Comcast (NASDAQ:CMCSA) is the latest telecommunications company to be affected by layoffs, according to the Financial Times. The publication has reported that Comcast’s Sky will enact layoffs equivalent to about 4% of its workforce, or roughly 1,000 jobs. Comcast became the majority owner of Sky in 2018 after acquiring the stake from 21st Century Fox for $40 billion. That price tag represented a 15x EBITDA multiple of Sky. As of 2018, Comcast held more than 75% of Sky’s issued outstanding shares.
However, Comcast may have overpaid, as the company incurred a $8.6 billion non-cash impairment charge last October.
Sky operates as a media and entertainment company in Europe, providing sports, news, video streaming, original content and mobile connectivity. The company also sells hardware, such as the Sky Glass, Protect and Stream. Sky is active in six countries and has 23 million customers.
Comcast Layoffs 2024: What to Know About the Latest CMCSA Job Cuts
According to people familiar with the situation, the layoffs will begin in a few weeks and will likely affect engineering and installation roles. This is attributed to Sky’s shift to internet streaming over satellite dish services. Around 80% of its customers are new and likely prefer streaming.
“Increasingly, customers are choosing Sky Glass and Sky Stream which don’t require specialist installation, and that has led us to change the number of roles we need to deliver our services,” said Sky.
The round of layoffs will follow a previously reported layoff round in May of 2023. The Financial Times stated that Sky would lay off hundreds of workers for the same reason of shifting its business to internet streaming.
Comcast reported its fourth-quarter earnings last week. Total revenue tallied in at $31.25 billion, up by 2.3% compared to $30.55 billion a year ago. The company remained profitable with an adjusted EPS of 84 cents, which rose from 82 cents year-over-year. A major bright spot was free cash flow, which grew by 28.5% to $1.70 billion.
Meanwhile, shareholders received a dividend boost of eight cents, or 6.9%, to $1.24 on an annualized basis.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
