UPDATED, 7 AM PT with executive comments: Comcast reported a 13% gain in adjusted third-quarter profit due to growth in broadband subscriptions, with net earnings per share reaching 52 cents, up from 46 cents in the year-earlier quarter.
The results for the period ending September 30 beat Wall Street analysts’ expectations. Total revenue of a shade less than $21 billion, while up 1% from a year ago, fell short of estimates. Consistent with industry trends, Comcast reported more erosion of its video subscriber base, with 134,000 residential video subscriber losses in the quarter as OTT and skinny-bundle options continue to proliferate.
Comcast is still the No. 1 U.S. cable operator by a wide margin, with about 22.5 million customers. In a conference call with analysts, CEO Brian Roberts made the case that Comcast was on top of the changes rippling through the traditional TV business. While “there will continue to be pressure as OTT comes in … we’ve taken our innovation machine and pointed it at broadband,” Roberts said. “We saw this shift coming. We’re pretty focused.”
Later, he said “it’s a shame” that the vast majority of people working in finance and media have never used the company’s X1 user interface because New York is a non-Comcast market. Being able to offer the more intuitive X1 interface means “we’re different,” Roberts added, noting that X1 churn rates are lower than industry averages and across Comcast’s broadband networks total consumption has risen 40% over the past year.
High-speed Internet revenue increased 8.9%, driven by the number of residential high-speed Internet customers and rate adjustments. The company said it had 214,000 net high-speed customer additions, reaching 25 million total broadband customers. Video revenue increased 4.2%, though the company reported net video subscriber losses of 125,000.
The revenue gains in video were due to rate hikes and pay-per-view boxing, plus customers signing up for extra services. Ad revenue plunged 13%, primarily due to declines in political advertising.
Revenue at NBCUniversal decreased 12.7% to $8 billion in the quarter. Excluding $1.6 billion of revenue generated by the broadcast of the Rio Olympics in the third quarter of 2016, though, revenue went up 6%. Adjusted EBITDA for NBCU gained 6% to $2.3 billion on upswings in film, cable networks and theme parks, offsetting a decline in broadcast TV. Broadcast revenue dropped 31% on flat ad revenue, but without the Olympics it increased 12% thanks to a 70% spike in retrans revenue. Film revenue climbed 11% to $394 million thanks to Despicable Me 3 and strength in home entertainment led by Fate of the Furious.
Two emerging growth stories, the company said, are Telemundo, which has started to match its longtime nemesis Univision stride for stride in the Hispanic TV ratings race, and operations in China. Execs said that China five years ago contributed zero to the balance sheet, but now generates “a couple hundred million dollars” in cash flow. After the company opens a new Universal Studios theme park in Beijing, which it expects to do by 2020, it could see more than $1 billion in operating cash flow, executives said.
“We have the fastest-growing media company, by a lot, and we like our position,” Roberts boasted. Then, turning more reflective, at least by earnings conference-call standards, he observed, “What sometimes happens is, you get so focused on areas of decline that you forget about areas that grow.”