Comcast’s Roberts: ‘I don’t see anything in the industry … we don’t already have today’

by Daniel Frankel | Jul 27, 2017 10:49am

Waving off the latest flurry of merger speculation, Comcast reported a strong 5.5% year-over-year revenue increase in its cable operation during the second quarter, based on what the company said was rate increases and customers signing up for additional services.

Earnings before interest, taxes, depreciation and amortization increased 5.4%, despite slightly lower-than-expected performance in customer metrics and a sharp spike in programming costs.

"The standout result in the cable segment was stable EBITDA margins, despite a 12% increase in programming expense," said Jonathan Chaplin, analyst at New Street Research.

Comcast lost 34,000 video customers in the second quarter, roughly in line with industry consensus forecasts for losses of around 24,000. Video revenue increased by 3.9%, with Comcast targeting a third-quarter launch for its new IP-video-over-managed-network service, Xfinity Instant Video.

Comcast added 175,000 high-speed internet customers in the second quarter, narrowly missing consensus estimates of 188,000 users. Revenue from broadband increased 9.2%.

Revenue from business services increased 12.6%

“There is significant runway ahead in broadband,” said Comcast Cable CEO Dave Watson, citing Comcast’s 45% penetration of broadband services in its footprint.

With revenue from Comcast’s NBCUniversal unit surging 17.3%, Comcast CEO Brian Roberts took time to shoot down the latest merger rumors, which have speculated on Comcast merging with everyone from Verizon to Charter.

“I thought we were really clear last quarter,” Roberts said. “Yes, we always look at the world around us and do our jobs related to the opportunities that are out that. But we love our business… No disrespect to wireless, but that’s a tough business. We like what we’re doing with Xfinity Mobile. It really improves what we hope it will improve. It will be a long road, and I don’t see anything in the industry where we envy a position we don’t have today. I think we have a really special company, and I wouldn’t want to do anything to change that."

Here is a breakdown of some of Comcast’s other key second-quarter metrics:

NBCUniversal: The turnaround at Comcast’s 2011 acquisition has yet to peak, with revenue from theme parks up 17.3% and adjusted EBITDA up 22.6%. Filmed entertainment spiked 59.6% in the second quarter, thanks largely to the $1.23 billion raked in at the global box office by the latest iteration of the long-running "The Fast and the Furious' franchise. EBITDA from broadcast and cable networks was up 5.5% and 11.7%, respectively.

Streaming: After testing its IP-delivered video service, Xfinity Instant Video, in Boston and Chicago, Comcast will deploy the service across its footprint in the third quarter. “This is not something we’ll do broad-based,” Watson said. “It will be very targeted [toward millennials]. We love our full video positioning with X1, but Instant TV gives us one more part of the portfolio to go after.”

More on mergers: MoffettNathanson analysts echoed Roberts’ sentiment on merger speculation in a morning memo to investors. “We can only imagine that all this mind-numbing nonsense is met with a mixture of frustration and amusement in Philadelphia,” Moffett wrote. “Incremental cost savings from additional scale in cable would be de minimis; relative valuations versus wireless are wholly unappealing; and the regulatory hurdles to any and all of these scenarios are daunting at best, and insurmountable at worst. And more to the point,” he added, “why in Heaven’s name would Comcast want to do any of them?”