Last week at the Morgan Stanley Technology, Media & Telecom conference, Comcast Chairman and CEO Brian Roberts said that in terms of the impact of COVID-19 on the company, “in the big picture, with 70% of our company being cable and broadband, and that consumption taking place in the home, we're in a very good business.” He was referring to the fact that as more companies ask people to work from home to avoid spreading the coronavirus, Comcast is positioned to provide them with broadband to continue doing their work. “So our base business is, probably at the moment, kind of unaffected,” said Roberts. “If anything, people appreciate the value of our product even more.”
However, he also said that Comcast could be negatively affected from coronavirus at its theme park in Osaka, Japan, which has been closed, “and that's probably going to mean about a 7% to 9% decline at the NBCUniversal level for the quarter based on how long that park is closed.”
It’s not known at this time when the park will reopen.
Comcast also had to close its Beijing theme park construction, putting 13,000 construction workers out of work for several weeks during the Chinese New Year and beyond because of the virus. But that construction is back on track now. “Our China team believes that we will open the park on time, despite this -- the disruption that occurred,” said Roberts.
Today, WellsFargo analyst Jennifer Fritsche wrote, “We are lowering our estimates to account for management comments made intra-quarter, including the expected near-term impact of COVID-19. Specifically, we are lowering our estimates for NBCU, as tougher year-over-year comps on films and the net impact on theme parks as a result of COVID-19 are expected to pressure results in first half of 2020.”
Roberts said, “Over at NBCUniversal is Peacock. And with what we're doing at cable with Flex, we're inclined to have Peacock and Flex come to the consumer as a bundled service, free.”
He also said, “If you look at the content side of the company: 24%, 23% of all the viewing is some form of NBCUniversal content. We have 55 television series we make or so.”
But Fritsche today wrote, “We look for NBCU segment to be the ‘tale of two halves.’ NBCU is comping against a difficult film lineup year-over-year, which we look to improve throughout 2020 with upcoming films like the Trolls World Tour (April) and Fast and Furious 9 (May) sequels. Further, with the Olympics still expected to occur, CMCSA should benefit from it and anticipated stronger political ad cycle in late-2020.”
Back to its cable roots, Roberts said, “We have about 55 million global video and broadband customer relationships. We grew that 1.5 million in 2019, about a 3% growth rate. Those relationships are north of $100 a month in ARPU, and that's 10 to 20x what any of the streaming companies have in revenues. So we're in a different space with that kind of footprint."
Fritsche wrote today, “We are slightly increasing our estimates for cable revenue as we look for continued momentum in high-speed digital subscriber adds to push take-rates and penetration higher. We continue to believe Comcast’s core connectivity business (~53% of total CMCSA revenue) and the strong momentum it continues to see here is being somewhat overlooked by the market.”