Comcast adds 32K pay-TV users in Q3, tunes out noise of AT&T/Time Warner merger

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Comcast continued its string of solid quarterly performances, particularly in the area of cable distribution, adding 32,000 video customers in the third quarter.

The growth compared to a loss of 48,000 pay-TV customers in the third quarter of 2015 and represented Comcast’s best third quarter video performance in 10 years. With the MSO also continuing to add broadband customers in big chunks – it grew its base by another 330,000 in Q3 – the company’s cable division reported 6.9 percent growth to $12.7 billion during the three-month period ending September 30. Programming expenses rose 11.4 percent in the quarter. 

All of these metrics beat analysts consensus forecasts. 

"Broadband growth continues to hum along with 330,000 subscribers added during the quarter," noted Barclays analyst Kannan Venkateshwar. "Despite the addition of more than 1.2 million subs annually for the last five years, the company is on pace to actually accelerating the pace of broadband net adds for the full year to around 1.4 million."

On the video side, Comcast executives echoed a familiar refrain, attributing the growth to the company’s X1 video platform, which is now deployed in 48 percent of its customers' homes – the MSO added 948,000 X1 users in the third quarter. Churn has now declined for 32 consecutive quarters, Comcast said.  Despite the addition of more than 1.2mm subs annually for the last 5 years, the company is on pace to actually accelerating the pace of broadband net adds for the full year to ~$1.4mm.

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Comcast continued to boast growth across operating units, including cable networks (revenue up 7 percent to $893 million) and theme parks (up 62.4 percent to $706 million).

The company even spun a positive story out of its Rio Summer Olympics coverage, which experienced double-digit ratings declines compared to the London Summer Games four years. earlier. 

The NBC broadcast network won the audience share race all 17 nights the Olympics were on in August, Comcast noted.  

Steve Burke, CEO of Comcast’s NBCUniversal division, downplayed recent ratings slides for both the Olympics and NFL football, noting that both are coming off record-breaking campaigns. 

“When you step back, you see that the Olympics and the NFL are still the highest rated programs of the year on television,” Burke said during this morning’s conference call with investment analysts. “Sunday Night Football is by far the highest rated show on television. We’re watching it – obviously you’d rather have ratings up than down … But it doesn’t cause us much concern.”

With AT&T stealing the headlines this week with its proposed $85.4 billion takeover of Time Warner Inc., Comcast executives were asked during the call how they might respond. They didn’t bite.

“We don’t typically comment on other deals,” Comcast Chief Executive Brian Roberts said. 

MoffettNathanson analyst Craig Moffett said no M&A response is expected – or needed – from Comcast. 

“What is perhaps most striking in the contrast between AT&T and Comcast is that Comcast's own business is doing just fine, thank you very much," he said. "They are growing their base of video subscribers for the first time in 10 years – today’s third quarter result was another positive surprise in what has become a string of them in video; their broadband business continues to shoot the lights out; they have a reliable growth engine in business services for years to come; and at NBCU, their broadcast network continues to improve, their move studio has consistently over-delivers, and their theme parks have been perhaps the best performing asset in the whole company.”