High-speed data boom drives Comcast profit beat
Comcast Corp’s quarterly profit and revenue topped Wall Street estimates on Thursday as strength in its high-speed internet business offset a less severe drop in cable TV subscribers.
The largest U.S. cable company’s third-quarter results demonstrated a resilience to industry forces that have buffeted its rivals.
As U.S. subscribers have continued to dump pricier pay-TV services in favor of cheaper streaming services, Comcast has managed to slow down defections, at least for a quarter, while growing its broadband services, on which all other products, including Netflix Inc and Amazon.com video, depend. High-speed internet is now the centerpiece of a strategy to survive a rapidly changing media landscape.
It also has remained the standalone among the big league players to resist the temptation to restructure to court consumers directly with streaming video products, as AT&T Inc and Walt Disney Co have done.
“We’re looking at different ways to accelerate our business in terms of streaming,” said Steve Burke, Chief Executive of NBCUniversal, which is owned by Comcast, on a conference call with analysts on Thursday. Burke added that it would not be a substitute for its existing pay TV business.
Shares rose 4.5 percent to $35.66.
To diversify, Comcast beat Rupert Murdoch’s Twenty-First Century Fox in an auction to buy European satellite TV broadcaster Sky for $40 billion in September.
Comcast Chief Executive Brian Roberts defended what was widely considered a high bid for Sky and said the company “was misunderstood and mispriced,” citing the difference in the European pay-TV markets compared to mature U.S. markets.
In a morning conference call, Sky Chief Executive Jeremy Darroch discussed investments in key categories such as original content and defend its leadership position in sports and movies.
Darroch also said Sky could easily capture 10 percent more of the remaining 78 million households that do not yet subscribe to a Sky product across its European territories, which would add 8 million customers. “It’s more than achievable,” he said.
He also vowed to “stick around,” which will help assuage investors concerned he would flee after the merger.
The results showed revenue from high-speed internet rose 9.6 percent to $4.32 billion in the quarter as the company added 363,000 internet subscribers, beating an average estimate of 294,000, according to research firm FactSet.
Comcast said it was the best performance for the division in ten years.
Net income attributable to Comcast rose 9.2 percent to $2.89 billion, or 62 cents per share, from $2.64 billion, or 55 cents per share, a year earlier.
Excluding items, the company earned 65 cents. Analysts were expecting 61 cents per share, according to Refinitiv.
Philadelphia-based Comcast’s revenue rose 5 percent to $22.14 billion, above the average estimate of $21.82 billion.
Comcast’s Xfinity Mobile, which operates off of Verizon Communication Inc’s network, added 228,000 net phone lines during the quarter, hitting 1 million total lines. CEO Roberts said that offering mobile with broadband has improved retention of broadband customers who buy both.
NBCUniversal revenue rose 8.1 percent to $8.63 billion.
Revenue from theme parks fell due to weather-related disruptions and natural disasters in Japan.