Comcast to face ‘headwinds’ in 2017 amid renewals with HBO, Fox News, Fox RSNs, Barclays predicts

Comcast

Barclays analyst Kannan Venkateshwar has advised media/telecom investors that Comcast could be “range bound” over the next several quarters, with the conglomerate facing “continuing cost headwinds in 2017.”

Those challenges include program licensing renewals with HBO, Fox News and Fox-owned regional sports networks, “with cost growth outpacing other distributors,”  Venkateshwar said. 

He also said that Comcast’s entry into wireless could lead to a “potentially elevated investment cycle in coming years.” 

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“Overall, while we expect Comcast's competitive position to continue improving given changes to industry structure and strength of the company's execution,” he added. But “these factors are unlikely to result in margin expansion, operating leverage, growth rate acceleration, or change in capital allocation strategy anytime soon.”

RELATED: Comcast to report 6K video customer losses in Q3, analyst predicts

Venkateshwar’s note comes a little over a week after Jefferies analyst Mike McCormack predicted that Comcast will register video subscriber losses of around 6,000 for the third quarter.

Such a loss would be a marked improvement over the 48,000 hemorrhaged in the third quarter of 2015 — which was actually Comcast’s best third-quarter pay-TV subscriber performance in a decade.

But sequentially, it might be seen as halting the recent customer momentum generated by the company’s popular X1 video platform.

Notably, the MSO lost only 4,000 customers in the second quarter, which is traditionally the weakest for pay-TV operators. 

“Consensus of a loss of 6,000 subscribers suggests little/no sequential improvement in what is traditionally a seasonally stronger quarter,” McCormack said in his note to investors on October 7. 

Comcast will report third-quarter earnings on October 26. 

Happily for Comcast, the analyst predicts high-speed internet subscriber gains of 345,000 for the third quarter, above Wall Street consensus forecasts of around 320,000. 

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