Comcast continued to lose pay TV subscribers in the first quarter, but cable revenues increased as the operator’s broadband base keeps expanding.
Comcast lost 121,000 video customers in the period, with its pay TV base shrinking at rate of 1.8 percent compared to about 4 percent for the industry overall, according to MoffettNathanson analyst Craig Moffett. AT&T yesterday reported losing 661,000 pay TV subscribers and Verizon lost 53,000 in the first quarter.
Broadband continues to shine at Comcast as the operator reported 375,000 net additions for the period, including 352,000 residential and 23,000 business subscribers. During the first quarter Verizon added 12,000 residential broadband customers, while AT&T added 45,000. Comcast now has about 27.6 million broadband customers and 21.8 million video subscribers.
Residential high-speed internet revenue increased 10.1 percent and total cable revenues grew 4.2 percent to $14.28 billion. Adjusted EBITDA for Comcast’s cable segment rose 9.8 percent to $5.7 billion. Broadband accounts for nearly a third of the cable business revenues.
Comcast is also spending less on customer equipment, with CPE spending down 27 percent year over year.
The cable operator’s Xfinity Mobile segment added 170,000 wireless subscribers in the quarter. More on that here.
Overall, consolidated revenue at Comcast was up 17.9 percent to $26.85 billion and net income increased 14 percent.
“Comcast Cable had the best quarterly EBITDA growth in over a decade, while NBCUniversal again posted favorable results. We also continued to strengthen our leadership position in valuable customer relationships and premium content,” said Comcast Chairman and CEO Brian Roberts in a statement. “Now with the inclusion of Sky, we grew customer relationships by 3.6% year-over-year, including 400,000 net additions in the first quarter, reaching over 54 million relationships in total.”
Revenues at Comcast’s NBCUniversal business decreased 12.5 percent year over year to $8.3 billion, but when excluding $378 million in revenue from the PyeongChang Olympics a year ago, revenue increased 3.2 percent. Sky brought in $4.8 million in revenue.
Comcast has plans to launch an NBCU direct-to-consumer streaming service next year, but Moffett questioned the path forward as Disney launches its own, low-cost DTC Disney+ product with a deep portfolio of content assets.
“No one but Disney has Disney’s monetization engine,” Moffett wrote in a Thursday research note. He noted that in order to compete with Disney in DTC without the company’s unique assets “would require a stupendous amount of spending on new and proprietary content.”
“In short, Comcast simply doesn’t have the DTC opening that Disney has,” Moffett wrote. “Sure, Comcast can, and undoubtedly will, dabble in DTC and AVOD. But Comcast’s best path forward is to defend the status quo. Disney’s DTC strategy will impoverish the status quo, however, leaving Comcast with some very difficult choices to make.”