business

Comcast loses 125K TV subscribers as cable giant pivots to broadband

Bob Fernandez, Staff Writer

Updated: Thursday, October 26, 2017, 7:19 AM

A Comcast truck works in Pittsburgh in March.

The nation’s largest cable company lost 125,000 TV subscribers in the third quarter, as streamers, legacy competitors, and historic hurricanes chewed away at its customer base. But Comcast Corp. also maintained 5.1 percent revenue growth in its cable division with new high-speed internet, home security, and 250,000 smartphone customers.

Comcast’s chief financial officer, Mike Cavanagh, said Thursday that about 20,000 of the lost cable TV subscribers were attributed to the devastating Florida and Texas hurricanes, leaving the remaining 105,000 lost subscribers to competition.

Overall, quarterly revenues for Comcast, including its NBCUniversal division, fell 1.6 percent to $21 billion, but only because of an unfavorable comparison with the advertising-rich Olympics in the year-ago period. Profits jumped 18.5 percent, to $2.7 billion.

CEO Brian Roberts, in a Thursday morning conference call with concerned Wall Street analysts, said that Comcast “saw this evolution coming,” with people opting to watch entertainment over streaming services, and prepared for it. The internet is increasingly the “epicenter” of the Comcast Cable division’s business, Roberts said.

Roberts and Comcast Cable head Dave Watson emphasized that the company’s internet service had higher profit margins than cable TV because there are no associated programming costs to content companies such as ESPN, Fox Sports, or NBCUniversal.

Watson also said there is room for new internet customers — it added 214,000 new high-speed subscribers — as Comcast makes the “pivot” toward an internet-based future.

Comcast said it added 250,000 mobile-phone lines after launching Xfinity Mobile during the summer. Roberts said the business could be profitable in about a year with continued growth. In addition, the company boosted its Xfinity Home business with 51,000 new customers, bringing the total subscribers in the unit — which offers home-security and smartphone features — to about 1.1 million subscribers.

Charter Communications, the nation’s second-largest cable operator, also reported third-quarter earnings on Thursday and noted that it had lost 104,000 TV customers — more indication of the distress in the pay-TV sector.

This year, Wall Street has been rattled by the unrelenting popularity of skinny bundles and streamers, as well as advertisers’ shift to Facebook and Google, big business trends that can hurt Comcast, which has more than 20 million TV subscribers and owns the NBC TV network.

Even as the stock indexes have marched to new records, Comcast shares trade well below their 52-week high. The stock closed Thursday at $36.27, down 0.56 or 1.52 percent, while Charter Communications shares shed 8.3 percent, down 28.22 to $316.29.

Telecom analyst Craig Moffett said in a report that there wasn’t much news to react to Thursday, as Comcast had disclosed its TV subscriber losses publicly in September, which caused its stock to plunge.

“It is tough to know whether these results are better or worse than feared,” echoed Jonathan Chaplin of New Street Research.

Analysts, meanwhile, seemed surprised by missed performance targets at Charter Communications. “The results were disappointing,” Chaplin said.

Comcast executives observed heightened discounting for pay-TV subscribers by AT&T and Verizon Communications in the third quarter. But they noted that Comcast won’t match deep discounting to chase new customers.

Revenue at NBCUniversal fell 12.7 percent, but again only because of comparison with the Olympics in last year’s third quarter. Adjusting for the Olympics, NBCUniversal revenue rose 6 percent in third quarter 2017.

The Universal movie studio is having one of its most profitable years ever, Comcast reported. NBCUniversal head Steve Burke said that revenue in China could climb from a couple hundred million dollars a year to more than $1 billion when the company opens its theme park in Beijing in five years or so.

Bob Fernandez, Staff Writer

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