Comcast's TV Subscriber Losses Accelerate, but Earnings Rise -- Update
October 26 2017 - 11:41AM
Dow Jones News
By Austen Hufford
Comcast Corp. suffered its largest quarterly loss of cable
television subscribers in three years, underscoring the pressure on
traditional TV players as new entrants heighten the competition for
customers.
The cable giant's results for the September quarter come as
AT&T Inc. and Charter Communications Inc. also reported
continued declines of pay-TV subscribers in their latest
quarters.
Comcast lost 125,000 residential and business TV customers, a
drop roughly four times higher than the second quarter. A year
earlier, it reported a gain of 32,000 customers. The company said
the spate of major hurricanes in the quarter cost it about 20,000
video subscribers.
But larger forces are at work as well. Traditional pay TV
providers are losing subscribers to new, more affordable online
channel bundles as well as streaming services like Netflix Inc.
Comcast also said it was monitoring more aggressive competition
from traditional rivals, who are responding to the growth of the
streaming players and making their own investments. AT&T has
been expanding its own ultrafast fiber internet service in new
markets.
Despite such concerns, Comcast on Thursday reported growth in
its internet access business and beat Wall Street profit
estimates.
"Our broadband business is increasingly the epicenter of our
relationship with customers," Comcast Chief Executive Brian Roberts
said on a call with analysts.
Comcast shares edged down in recent trading.
Charter, whose shares were down 7% in recent trading, shed
104,000 television customers in its latest quarter, the company's
sixth-consecutive quarterly decline. Still, it saw 249,000 new
internet subscribers.
Comcast said the new cellphone service it launched this year to
help boost its internet service business has more than 250,000
customer lines. Every mobile subscriber isn't currently profitable,
but Comcast said that should change as the service scales. The
cable operator is relying on a five-year-old network-resale
agreement with Verizon Communications Inc.
Comcast and other cable providers stand to benefit on the
internet access side of their business as streaming TV
subscriptions and usage increase.
On a call with analysts, Comcast said the shift from video to
internet could lead to higher profit margins. Its stand-alone
internet service is more expensive than as part of a bundle and
costs the company less proportionally.
"As this shift is occurring, the utility of broadband to the
consumer is going up every year," Mr. Roberts said.
Comcast gained 214,000 internet customers in the quarter, down
from the 330,000 gained in the year-earlier period.
Total revenue per customer relationship increased 2.1%. Overall
revenue for Comcast's cable division, which makes up 62% of the top
line, rose 5.1% to $13.2 billion.
At the NBCUniversal media division, revenue and profits had
tough comparisons with last year, when the company's networks aired
the 2016 Olympic Games. Revenue in the division fell 13% to $8.01
billion, with declines in both the broadcast television and cable
networks divisions. Revenue rose 6% excluding the impact of the
Olympics.
Advertising revenue was hurt by the lack of Olympics advertising
and less political-related spending due to the election cycle last
year.
Revenue in the filmed entertainment division fell 0.5% as there
were no megahits in the quarter. Still, the company's release of
"Despicable Me 3" highlighted its focus on growing the size of its
franchise business, which provides revenue beyond a movie's theater
run.
Theme parks revenue increased 7.7%, driven by new attractions in
Japan and Orlando, Fla. The company also highlighted opportunities
in China, saying it could eventually see more than $1 billion in
annual revenue there when a Beijing theme park opens.
In all, net income rose to $2.65 billion, or 55 cents a share,
up from $2.24 billion, or 46 cents a share, a year earlier. On an
adjusted basis, earnings per share came in at 52 cents.
Revenue fell 1.6% to $20.98 billion but adjusted revenue,
excluding the impact of the Olympics, grew 5.8%.
Analysts polled by Thomson Reuters projected adjusted earnings
of 50 cents a share on $21.04 billion in revenue.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
October 26, 2017 12:26 ET (16:26 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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