Broadband under pressure
The company reported a net loss of 104,000 domestic broadband customers, reducing the total subscriber base to approximately 31.4 million. It was the fourth consecutive quarter without broadband growth for Comcast, which faces heightened competition from fixed-wireless and 5G providers. Earlier this year, management unveiled new initiatives aimed at re-accelerating broadband additions, positioning the product as the cornerstone of the business.
Connectivity remains critical as Comcast moves toward closing the Versant transaction, an agreement that will spin off a portfolio of cable networks and leave the company even more focused on broadband and wireless services. Leadership will also shift in the coming months: a planned co-CEO structure will pair current Chief Executive Brian Roberts with President Mike Cavanagh.
In a related management change, Comcast said Steve Croney will become chief executive of the Connectivity and Platforms segment, succeeding long-time division head Dave Watson. Croney has been serving as chief operating officer while the company pursues its strategy to revive broadband growth.
Segment performance
Connectivity and Platforms: Revenue from broadband, mobile, pay-TV and related services totaled $20.18 billion, down nearly 1 percent year over year. Within that total, the company added a record 414,000 mobile lines, bringing wireless lines in service to 8.9 million. Mobile growth has offset, in part, softness in the core broadband category.
The traditional pay-TV business continued to shrink, losing 257,000 customers during the quarter and leaving 11.5 million domestic subscribers as of Sept. 30. The trend mirrors ongoing industry cord-cutting, highlighted in recent Federal Communications Commission reports.
NBCUniversal: Comcast’s media subsidiary generated $6.6 billion in revenue, a decline of almost 20 percent from the prior year, which included advertising and licensing gains tied to the Beijing Winter Olympics. Excluding the Olympic comparison, media revenue climbed 4 percent, and EBITDA grew 28 percent to $832 million, supported by lower programming costs and growth at streaming service Peacock.
Peacock ended the quarter with 41 million paid subscribers, essentially flat over the past nine months. The service posted a quarterly loss of $217 million, an improvement from a $436 million deficit in the same period last year. Management expects the recently launched National Basketball Association rights package, which brings NBA games back to the NBC broadcast network and to Peacock, to bolster subscriber engagement.
Film and Theme Parks: Studio revenue rose 6 percent to $3 billion, lifted by July’s wide release of “Jurassic World Rebirth.” Theme-park revenue advanced nearly 19 percent to $2.72 billion, supported by the May opening of the Epic Universe attraction in Orlando. EBITDA for theme parks climbed 13 percent to $958 million.
Strategic outlook
Comcast reiterated that the broadband landscape is likely to remain highly competitive. Management has pointed to bundled offerings that pair wireline internet with wireless service as a principal tool for retaining and attracting subscribers. The appointment of a dedicated CEO for the connectivity division underscores the emphasis on execution in that area.
The planned spin-off of cable networks into the separately traded Versant entity is scheduled to be completed by year-end. Upon closing, Versant would become the new parent company of CNBC, while Comcast would continue to own NBCUniversal’s film, television and theme-park operations.
Despite the headwinds in broadband and pay-TV, third-quarter results demonstrate that mobile additions, improved streaming economics and growth in parks and film releases can offset declines in legacy businesses. The company did not issue updated full-year guidance during the earnings call.
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