Comcast Spells Out Plans To Slow Broadband Sub Losses
Michael Kavanagh (Photo courtesy of Comcast)
Comcast says it is taking steps to slow its loss of valuable broadband subscribers.
The company’s first-quarter earnings beat forecasts for both net income and revenue, but concerns over the departure of another 199,000 broadband customers and a 6.8% drop in domestic ad revenue at NBCUniversal worried Wall Street and sent Comcast shares down more than 4% to $33.01 in Thursday morning trading.
Comcast also continues to lose video subscribers.
Bright spots included continued increases in its wireless phone business, growth in business services and reduced red ink at Peacock, now up to 41 million subscribers, thanks largely to a deal that makes the streaming service available to Charter’s video subscribers.
On its conference call with analysts and investors, Comcast execs said they have not yet felt effects of the economic turmoil caused by Trump administration policies that could affect consumer spending, tourism to the U.S. and even the price of cellphones and other electronic devices.
Cable companies like Comcast have been taking a beating from wireless broadband. Comcast has been spending to upgrade its broadband network, increasing speed and bandwidth. That hasn’t slowed churn, Comcast execs admitted.
After boasting about the superiority of Comcast’s broadband and wifi capabilities, Comcast President Michael Cavanagh added that “however, and this is a big however, in this intensely competitive environment, we are not winning in the marketplace in a way that is commensurate with the strength of the network and connectivity products that I just described.”
He said the cable giant has tried to understand why that’s happening, and came up with two main causes.
“One is price transparency and predictability, and the other is the level of ease of doing business with us,” Cavanagh said.
He said Comcast is making changes in its organization and marketing strategy to address them.
“We are simplifying our pricing construct to make our price to value proposition clear to consumers across all broadband segments,” he said. Just last week, Comcast announced its first nationwide price guarantee for broadband that includes Xfinity’s gateway and unlimited data for one simple monthly price that is locked in for five years with no annual contract required,
“We are not done providing more value to our customers with less complexity and friction is a top priority, and you will see our go to market approach continue to evolve over the coming months,” Cavanagh said.
He conceded that the new approach would cut into profits in the short term.
“Obviously this is going to make it more difficult to grow EBITDA this year. We effectively said that last quarter. I think that's where expectations are for us already,” Cavanagh said. “But the other side of this when we get through it, is really what we're positioning ourselves for, which is customers that are a heck of a lot more durable. They're on price plans that are sort of at market rates, with long term contractual guarantees, and then a discounted wireless offering that's more broadly exposed to our base, gives us a heck of a pricing lever over time.”
Comcast has shifted its strategy to focus on areas of growth, including connectivity, convergence and theme parks.
“Our steady shift in business mix to a diverse group of growth areas, combined with our strong balance sheet, allows for steady execution against our strategy, even as the level of uncertainty in consumer and capital markets has meaningfully increased in the past several months.” said Cavanagh. “While we don't see any noteworthy evidence of economic challenges for the year thus far, the odds have increased that challenges may be approaching, but we are well positioned to handle whatever lies ahead.”
While the economy is also a concern for the TV ad market, Comcast CFO Jason Armstrong said NBCUniversal has not seen pullbacks.
“While we have not yet seen any impacts from the current macroeconomic uncertainty, advertising is a category that has shown the most economic related cyclicality in our business historically,” Armstorng said. “However, for the upfront and for the balance of the year, we feel well positioned in the market as we capitalize on the NBA launching in the fourth quarter and a healthy Peacock content offering across entertainment and news.”
The company noted that its planned spin off of its cable networks is still expected to be finalized by the end of the year.
Here are the key numbers from Thursday’s earnings release:
Comcast’s Content & Experiences business–NBCUniversal–generated $1.49 billion in adjusted EBITDA, down 0.1%, as revenue inched up 0.8% to $10.457 billion
Media EBITDA was up 21.5% to $1.004 billion. Revenue rose 1.1% to $2.825 billion. Peacock’s loss was reduced to $215 million from $639 million a year ago. Peacock revenues rose to $1.2 billion from $1.1 billion.
Studio segment EBITDA increased 22.3% to $298 million as revenues rose 3% to $2.826 billion.
Domestic ad revenue was down 6.8% to $1.886 billion.
Comcast’s cable business–Connectivity & Platform–had EBITDA of $8.34 billion, up 1.5% from a year ago. Revenue slipped 1.3% to $17.6 billion.
Total Customer Relationships for Connectivity & Platforms decreased by 228,000 to 51.4 million. Total domestic broadband customer net losses were 199,000 and total domestic video customer net losses were 427,000. Comcast’s mobile phone business remained strong with the company adding 323,000 domestic wireless lines in the quarter.
Comcast finished the quarter with 12.1 million video customers. Residential video generated $6.7 billion in revenue, down 5.4% from a year ago.
Advertising revenue was down 7.4% to $881 million.
Overall, Comcast reported net income fell 12.5% to $3.375 billion, or 89 cents a share, down from $3.857 billion, or 97 cents a share a year ago. Revenue slipped 0.6% to $29.887 billion.
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AdOmni and it is working with LiveRamp to provide advertisers using the AdOmni platform with targeting and attribution measurement of campaigns running across connected TV, online video and digital out of home.
With LiveRamp’s clean room enabling the secure use of first-party data, brands will be able to plan, activate and activate campaigns.
Marketers that have begun using the new capabilities include the Hershey Co.
“Being able to see campaign performance across CTV, OLV, and DOOH in one place—and act on that data—is incredibly valuable,” said Vinny Rinaldi, VP of media & marketing technology at Hershey. “Especially in times like this, where effective reach and ROI are everything.”
AdOmni said that it now offers unified reporting on reach, frequency and conversion of multi-platform campaigns.
“Marketers deserve better than guesswork,” said Jonathan Gudai, CEO of AdOmni. “This partnership delivers what they’ve long been asking for—real accountability for video and DOOH. By connecting the dots between exposure and outcomes, we’re giving advertisers the confidence to treat those channels as performance drivers, not just awareness plays.”
“LiveRamp is delivering the foundation for modern measurement to two of the fastest-growing and most dynamic media channels — video and DOOH,” added Christine Grammier, VP of Global Insights Products at LiveRamp. “By building on top of the LiveRamp Data Collaboration Platform, AdOmni’s Smart Video Everywhere technology brings their incredibly powerful AI decision-making across their expansive screen network so marketers can activate and measure — no matter where the screen is or where the viewer sees the message.
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Nexxen announced that it is using artificial intelligence across all aspects of its business–,demand-side platform, supply-side platform, the Nexxen Data Platform and its in-house creative studio, Nexxen Studio–to improve users ability to plan, activate and optimize campaign while helping publishers monetize content.
“Our clients are continuing to lean into data and technology to navigate the fragmented media landscape, and nexAI meets this evolving need," said Karim Rayes, Chief Product Officer at Nexxen. "By integrating AI across our unified platform – and leveraging our existing data to inform these capabilities – we're not just adding features; we're fundamentally transforming the way campaigns are run and inventory is monetized.”
The first feature enabled by AI is a chatbot integrated into Nexxen’s DSP that will help streamline workflow and improve performance while providing insights about campaign delivery both mid-flight and post-flight.
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LG Ad Solutions said it was working with AdGood to make connected TV ad inventory available to non-profit organizations at a fraction of their normal cost.
“This partnership between LG Ad Solutions and AdGood Foundation is a huge moment for Streaming and Nonprofits,” said Kris Johns, CEO of AdGood,. “By donating their premium inventory, LG Ad Solutions is setting the standard for how CTV can be a force for social good. This is about more than just advertising—it’s about empowering nonprofits, elevating awareness in local and national markets, and making a real difference.”
Nonprofits that join the LG platform can instantly generate professional-quality ads using AdGood’s built-in creative tools. Real-time analytics. Publishers whose inventory is used by nonprofits will get annual impact reports so they can track the value of their donated impressions and understand the causes they’re helping to support.