Q1 2021 Comcast Corp Earnings Call
[music].
Good morning, ladies and gentlemen, and welcome to Comcast first quarter 2021 earnings conference call. At this time all participants are in a listen only mode. Please note that this conference call is being recorded I will now turn the call over Jim Senior Vice President Investor Relations. Mr. Moorthy right occur. Please go ahead Mr. <unk>.
Thank you operator and welcome everyone joining.
Joining me on this morning's call are Brian Roberts, Mike Cavanagh, Dave Watson that shop, and Dana strong.
Brian and Mike will make formal remarks, Bob gave Jeff and Dana will also be available for Q&A let.
Let me now refer you to slide two which contains our safe Harbor disclaimer and remind you that this conference call may include forward looking statements.
Certain risks and uncertainties.
In addition, during this call we will refer to certain non-GAAP financial measures. Please see our 8-K and trending schedules for the reconciliations of these non-GAAP financial measures to GAAP with that let me turn the call over to Brian Roberts for his comments Brian.
Thanks, Marcy and good morning, everyone.
We certainly got off to a great start this year.
Our entire company performed well and we once again had particularly strong results of cable, which posted its third consecutive quarter of double digit EBITDA growth ninth consecutive quarter of double digit net cash flow growth.
We added 461000 broadband customers, which drove 380000 customer relationship additions.
This is the best first quarter on record.
Connect activity was healthy and broadband churn improved for the 13th quarter in a row.
Our lowest churn rate in our company's history.
I'm very proud of this quarter's results and our long record of growth, which I believe is a direct result of disciplined investment fantastic innovation and consistent execution in a highly competitive market.
This morning, I'd like to go a bit deeper into areas.
The robustness of our network in the U S and more broadly how we positioned ourselves to successfully compete against alternative providers and technologies.
We've spent nearly $30 billion in the last decade building, an expansive fiber dense network comprised of 191000 route miles that carries an immense amount of traffic there's demonstrated extraordinary performance throughout the pandemic.
Under Tony Werner our retiring Chief Technology Officer, we have consistently engineered our network to anticipate change.
And during his 15 plus years of Comcast. He has helped transform us into a product and technology innovator and leader.
Tony Thank you.
He's being succeeded by Charlie Herrin.
Many of you on this call are familiar with Charlie he helped develop game changing products, including scaling ex one and most recently led to successful effort to redefine how we interact with customers, which has resulted in significantly higher NPS scores and lower operating costs.
Charlie Dave and I have been fortunate to work together for 20 years.
Under Dave and Tony we've recruited the best Engineering talent around the World and now are working as one global Tech team.
We ate platforms apps and experiences.
Evolve the way people connect and consume entertainment.
Done all this while keeping our network our number one priority.
We've introduced the X by advanced Gateway, the most powerful of its kind our highest users are connecting a wide variety of devices in the home and streaming multiple services simultaneously over Wi Fi.
Our X five pods integrate with Xfinity gateways to form a mesh network that maximizes Wi Fi coverage. All you do is plug one of these pods into an outlet to get great coverage in every room.
We provide our customers with what they need which goes well beyond extraordinary connectivity and speed Xfinity as the only broadband provider to offer advanced security for monitoring devices inside and soon outside of the home.
Also uniquely provide our customers with a whole home speed test and enable parents to manage internet time spent by streaming applications.
This is all backed by a network that is built to consistently deliver the fastest speeds and outperform well into the future with two major initiatives underway.
The first is virtualized on our network by leveraging artificial intelligence and machine learning.
We're taking functions that were once performed by thousands of large and expensive pieces of hardware and moving them into the cloud, which alone has reduced innovation cycles from years down to just months.
We're also automating many of our core network functions. So that we can deliver instant capacity as well as identify and fixed network issues before they ever affect our customer.
Our second priority is further enhancing how we deliver our broadband product over our network.
We currently offer downstream speeds of 1.2 gigs across our entire footprint using our DOCSIS three one architecture and can increase upstream in a capital efficient way.
We're making great progress to deliver multi gig symmetrical speeds in the last six months, we completed two important milestones on our roadmap at all.
Tober, we conducted a successful life test of 1.25 gig symmetrical speeds.
And earlier this month, our engineers completed the first ever live lab tests of DOCSIS, 4.0, which establishes a foundation for us to deliver multi gigabit speeds over our existing network without the need for massive digging and construction projects.
Let me next talk about Xfinity mobile, where we're having great success there.
This past quarter, we reached breakeven on a standalone basis for the first time.
Added 278000 mobile lines, our highest quarterly addition since launch.
We just announced a new unlimited family plan, which can provide $600 in annual savings relative to other competitor family plans.
Now, let's turn to Sky, which despite renewed locked down to Europe generated revenue growth and delivered the best first quarter customer relationships. Net addition in six years.
I'm, particularly encouraged by our strong performance in the U K.
Excluding pubs and clubs, which remain closed.
UK direct to consumer revenue grew 8% over the first quarter 2020 at 11% relative to 2019.
Churn continued to trend down.
Two thirds of our customer base in the U K now have sky Q.
We're seeing great acceleration in mobile and we just launched Sky conduct our b to B broadband service that leverages the expertise of Comcast cable.
Dana strong is off to a great start and is syncing up more than ever with Comcast cable and NBC Universal So that together, we're all innovating more quickly better serving our customers and viewers and increasing operating efficiencies.
We're also encouraged by the trends, we're seeing across NBC Hugh.
Our pork segment broke even excluding Beijing for the second consecutive quarter driven by remarkable attendance at Universal Orlando.
We can see firsthand the pent up demand for high quality entertainment and family fun outside of the home.
And we remain incredibly bullish on the parks business.
While a shocker recently had to close temporarily Universal Studios Hollywood reopened on April 16th.
First time since the pandemic started.
Our long term excitement stems from the fact that we have a fabulous roadmap of new attractions and experiences waiting guests as they safely return to our current parks.
And NBC Universal Media segment under Jeff Shell and Mark Lazarus, we're starting to see the benefits of our new operating structure.
[laughter] Peacock adjusted EBITDA increased 10% year over year.
News content continues to experience tremendous momentum and distribution revenue was trending above expectations, a testament to the strength of our linear brands.
We're back in business on the studio side with more than 30 television series currently in production and we're excited for our first big theatrical debut with fast nine launching in both the U S and China later in the second quarter.
We're also making great progress with Peacock, our premium AD supported streaming service.
Just one year post launch when you have 42 million sign ups monthly users of the service are consuming nearly 20% more programming hours each month than our traditional audience on NBC and we just crossed 1 billion total hours watched nearly double our plan when we launched.
This strength in users and engagement has enabled us to create additional advertising inventory outside of our initial partnership with C. P. M at a material premium to linear prime time.
Peacocks domestic success has been <unk> with X one in flex driving subscriber acquisitions and healthy engagement.
With Peacock, we've created great options for ourselves with several opportunities on the horizon.
Recently secured more original programming with creative partners like Ww E and the NFL, providing a strong path to upsell into Peacock premium.
Is peacock gained scale in the U S. We see compelling ways, we can expand internationally well.
Looking to take advantage of the brand and scale of sky across our European markets and potentially strike partnerships with local programmers and distributors in geographies, where it makes sense.
We plan to share more information on Peacock throughout this year.
So in summary, we're all very proud and encouraged by our first quarter results. This performance is a testament to the resilience and evolution of our company.
Excellent execution of our growth initiatives combined with tight cost control brings us one step closer to our balance sheet goals and I am eager to see us return to our historical practice of repurchasing shares starting in the second half of this year.
Lastly, I want to thank our team everyone across the company has continued to show up and innovate for our customers audience guests and each other we.
We were recently named as one of the top five big companies to work for in the U S.
One of the top 10 inclusive companies in the U K, a testament to the work and passion of our wonderful employees.
Mike over to you.
Thanks, Brian and good morning, everyone I'll begin on slide four with our first quarter consolidated 2021 results.
Revenue increased two 2% to $27 $2 billion adjust.
Adjusted EBITDA increased three 5% to $8 4 billion.
Adjusted EPS increased 7% to <unk> 76 per share and finally, we generated $5 $3 billion of free cash flow.
Now, let's turn to our business segment results, starting with cable communications on slide five.
Cable revenue increased five 9% to $15 $8 billion.
EBITDA increased 12% to $6 8 billion and EBITDA less capital grew 16% to $5 $1 billion.
We added 380000 net new customer relationships.
Two 4% over last year's first quarter and up 27% over the first quarter of 2019.
This was the best first quarter on record and was driven by broadband where we added 461000, net new residential and business customers.
Only slightly below last year's first quarter and 23% above the first quarter of 2019.
We saw a healthy connect activity.
This quarter marked the lowest broadband churn in our history.
This positive momentum has continued into the second quarter and from what we see today, we anticipate total broadband additions for the year to grow by mid single digit levels compared to 2019, which aside from the extraordinary growth. We had in an unusual 2020 was the best year in more than a decade.
<unk>.
The strong customer additions, coupled with our <unk> growth of four 4% drove a 12% increase in broadband revenue for the first quarter. The largest driver of overall cable revenue and we expect this trend will continue.
We also saw an acceleration in both business services and wireless.
Business services revenue increased six 1% and delivered 11000 net new customer additions, primarily driven by continued improvement in small business.
Wireless revenue grew 50% due to an increase in both customer lines and higher device sales.
278000, net new lines in the quarter.
Best results since launching this business in 2017, bringing us to $3 1 million total lines as of quarter end.
Turning to video revenue was consistent with the prior year, reflecting very healthy <unk> growth of six 8% offset by net video subscriber losses totaling 491000.
Which we felt mostly on the connect side as the residential churn improved year over year.
We believe our residential rate adjustment at the beginning of the year was a significant contributor to both the <unk> increase and the video subscriber loss in the quarter and we expect video losses in the second quarter will remain elevated.
We currently anticipate cable communications revenue growth in the second quarter to accelerate by a few hundred basis points from the five 9%. We just reported partly due to the comparison to last year's second quarter, which was most significantly impacted by COVID-19, as well as our focus on driving growth in our connectivity.
Businesses.
Turning to expenses cable communications first quarter expenses increased one 5%.
Programming expenses were up five 5%, primarily due to the number of contract renewals that started this cycle through in 2020 combined.
Combined with annual escalators and existing agreements.
Looking to the second quarter, we expect programming expense growth to increase at low double digit levels due to the continued impact of contract renewals as well as the comparison to last year's second quarter, which was favorably impacted by adjustments accrued for customer RSM fees.
For the full year, we continue to expect programming expense to increase at high single digit levels.
Non programming expenses declined one 1% on an absolute basis and five 9% on a per relationship basis, while our customer relationships grew 5% year over year.
Non programming expenses should increase at high single digit rate in the second quarter due in part to the comparison to last year, which reflected the slowdown in business activity due to COVID-19, as well as our continued focus on driving growth in our core broadband and wireless businesses.
Cable communications EBITDA grew by 12% with margins, reaching 43, 2%, reflecting 250 basis points of year over year improvement.
These results include the important milestone of our wireless business, reaching breakeven for the first time since launch.
Cable capital expenditures increased 8%, resulting in capex intensity of eight 7% up slightly compared to last year and driven by a 23% increase in scalable infrastructure as we continue to invest to enhance the capacity of our network.
This spending was partially offset by lower customer premise equipment and support.
Now, let's turn to slide six for NBC Universal.
As you know, we recently issued an 8-K with updated trending schedules and our new reporting format that reflects the way. The business is now managed remove peacock, which was previously reported in our corporate results NBC Universal and now we present NBC you in three business segments.
Here, which combines our television businesses in Peacock.
He owes which combines our film and television studio businesses and theme parks.
I will discuss today's results in this new format.
Let's start with total NBC Universal results.
Revenue decreased nine 1% to $7 billion, and EBITDA was down 12% to $1 $5 billion.
Media revenue increased three 2% driven by nine 1% growth in distribution revenue, which reflected higher rates post the successful completion of several carriage renewals at the end of 2020.
Partially offset by subscriber declines which showed sequential improvement.
Advertising revenue declined three 4% as lower entertainment ratings and tough political comps were partially offset by more sports in the quarter strengthened news and the launch of Peacock.
Media EBITDA declined three 7%, when including Peacock, which generated revenue of $91 million and an EBITDA loss of $277 million.
Excluding Peacock media EBITDA increased 10%, primarily driven by lower expenses, which was partly due to lower entertainment costs associated with fewer original hours aired and partly due to our new operating model.
This year over year reduction more than offset higher sports cost, resulting from additional events.
Looking to the second quarter, we expect healthy growth in distribution revenue to continue.
We'll have significantly more sporting events compared to last year, which should result in higher advertising revenue, but also a significant increase in sports related programming and production costs.
Studio revenue was flat compared to last year, primarily reflecting higher content licensing revenue offset by lower theatrical revenue.
Content licensing revenue increased 14%, primarily due to licensing deals, including the office, which became exclusively available for streaming on Peacock. This past January.
<unk> revenue decreased eight 8%, reflecting the deferral of theatrical releases due to COVID-19.
Significantly fewer releases in the first quarter resulted in lower expenses driving EBITDA growth of 66%.
We're excited to be releasing fast nine and theatres later in the second quarter.
But we delayed the release of minions two from July of this year to July of 2022, which will shift the profits from 2021% to 2022 as well as we continue to manage our film slate to maximize value.
Theme parks revenue decreased 33, 1% in the quarter and generated an EBITDA loss of $61 million, which included $100 million of Universal Beijing Preopening costs. These results reflect universal Orlando resort operating at limited capacity, but trends remain encouraging.
<unk> as attendance continues to rebound and we've been at or near capacity limits Bruce spring break.
Hollywood remained closed during the quarter, but we recently opened at a 25% capacity limit and expect this to move higher by June 15th.
In Japan, we recently had to close our parked temporarily due to rising COVID-19 cases, but prior to this we had seen strong demand looking ahead, we expect our EBITDA results to improve in the back half of the year as domestic attendance trends improve and we remain on track to open our new Park Universal Beijing.
<unk> this summer.
Now, let's turn to slide seven for Sky, which I'll speak to on a constant currency basis for.
For the first quarter Sky revenue increased 2% to $5 billion.
Largely reflecting healthy growth in our UK business.
Direct to consumer revenue increased one 8% with growth in the UK even stronger.
This result was driven by higher average rates per customer and strong customer growth across all markets.
We generated 221000 net customer additions the best first quarter in six years, driven by streaming across our markets as well as steady momentum in mobile and broadband within the UK.
Advertising revenue increased three 4% as we continue to outperform the market, particularly in the U K, where the AD market is rebounding more quickly than we expected and we are driving growth through advanced advertising.
<unk> generated $364 million in EBITDA in the first quarter as expected. This reflects elevated expenses, including higher sports rights amortization, resulting from more events in the current quarter as well as higher expenses associated with successfully growing our mobile and broadband businesses and <unk>.
Investment in key growth initiatives, which now includes sky connect a recently launched commercial broadband business in the UK.
For the second quarter, we expect revenue growth to accelerate to low double digit levels on a constant currency basis due to the comparison to last year's second quarter, which was the most impacted by COVID-19, as well as continued strength in our UK business. We also anticipate significantly higher sports rights amortization.
<unk> and compared to last year when events were paused.
As a result, we expect to generate a similar level of EBITDA in the second quarter as we did in the first quarter. We were recently outbid for some of the broadcast rights for Syria, and Italy, as we stood firm and our disciplined approach to sports related costs. We believe this was the right long term financial decision.
Though we expect a reduction in programming and production expenses and a potential decline in customer relationships in Italy as a result.
We continue to expect Sky EBITDA in the second half of this year to accelerate from first half levels.
Collecting the benefits of a reset to major sports rights as well as a more efficient operating structure.
Our ASP up with free cash flow and capital allocation on slide eight.
Free cash flow was $5 3 billion in the quarter, an increase of roughly 60% year over year, primarily due to an improvement in net working capital and higher EBITDA.
Net working capital will continue to fluctuate on a quarterly basis, and we still expect the full year drag increase relative to 2019 due to an increase in content investments our broadcast of the Olympics and the reversal of COVID-19 related onetime tax deferrals.
Consolidated total capital, which includes capital expenditures as well as software and intangibles decreased one 1% in the first quarter to $2 5 billion, reflecting a decline at NBC, Hugh which was partially offset by increases at sky and cable.
We ended the first quarter with $104 billion of debt with a weighted average cost of three 6% and a weighted average life of $14 five years and net debt of $86 billion for a net debt to EBITDA ratio of two seven times.
Throughout the pandemic, we have maintained an elevated cash balance to fortify our liquidity position and we ended the first quarter with $15 billion of cash and cash equivalents we.
We expect to gradually reduce our cash position by deploying excess cash towards debt reduction throughout the remainder of the year as our business operations continued to recover.
Finally, we remain committed to our long standing balanced approach to capital allocation.
Which consists of maintaining a strong balance sheet <unk>.
Investing organically for profitable growth and.
And returning capital to shareholders grew a strong commitment to our recurring dividends and our expected return to share repurchases in the second half of this year.
Thanks for joining us on the call. This morning, I'll turn it back to Marci, who will lead the question and answer portion of the call.
Thanks, Mike Regina, let's open the call for questions Paul Thank.
We will now begin the question and answer session. If you have a question. Please press star and then the number one on your Touchtone phone if you wish to be removed from the queue. Please press the pound key.
Using a speakerphone you may need to pick up the handset first before pressing the numbers once a day and if there are any questions star and the number one on your Touchtone phone. Our first question comes from the line of Jessica Reif Ehrlich with Bank of America Securities. Please go ahead.
Thank you good morning.
The company clearly isn't an upswing as we come out of COVID-19 and the leverage in the business is really apparent in the first quarter numbers have a broad based question that covers basically all of the divisions.
Cable it feels like the beginning for advanced advertising listing strength still and brought down the price decrease in mobile to drive market share and NBC, Hugh which seems like a division with the most upside coming out of COVID-19.
No.
I don't know if this is the year of peak losses for for Peacock, but theme park seemed like they're on a five year growth trend advertising productions coming back et cetera, Sky you could see the leverage. So my question finally is.
Where do you see the most leverage overall in each of the businesses and can margins and free cash flow continued to improve.
Well, thank you Jessica for those comments.
Why don't we just go around the horn and why don't we just go from day to Dana to Jeff and everybody give a crack at.
Their view of the business and the chance for them to introduce themselves on the call here.
Thank you Jessica this is Dave.
Start with kind of our focus.
<unk> to be maintaining momentum.
The connectivity side of the business so broadband residential commercial.
Is enormously important in a great growth engine for us.
We're going to continue to enhance broadband keep adding to it you know speed control coverage and now streaming and as you mentioned mobile so we're going to focus on accelerating our mobile and just surrounding broadband with these products. So that's going to be.
That's our strategy nothing we'll shake that and in terms of EBITDA.
Net debt we yard we like are the recurring revenue aspect of the connectivity business, we like the margins that that contributes towards.
Very focused on taking out the transactions that you have.
Cause customer noise, and so focusing on digital focusing on things like self install kits. Those all the things that we've been talking about will continue.
So.
I feel very good about our position in the marketplace. So there's.
A lot of upside still on broadband feel good about mobile camp business services.
Hi, Jessica this is Dana.
Following up some day side from the Sky angle, we're really really happy with the fundamentals of the business in Q1, our Q1 results demonstrate the position that we're in our subscriber numbers Opex in fact quarter one in about six years, turning down revenue is that about all of the fundamental factors of the business.
Position us well to exit COVID-19.
Be more specific on your question in regards to where do we see the most leverage if I had to boil it down I would say the UK. The UK is an extraordinary.
<unk> for growth got a very diverse revenue base with them.
Dth, having its best performance in Q1, and six years streaming is going Wow mobile is growing very well broadband is growing well with a lot of innovation.
So I think what we see in the U K a lot of growth left.
That business in a really solid.
To build upon in the rest of the portfolio.
Hi, Jessica this is Jeff and hi, everybody. So there's a lot of different places I can pick and choose from Augusta NBC Universal, but let me just talk about two points of leverage that I'm excited about I think first of all as we've talked about on previous calls, we really adjusted our cost base across the entire company during the pandemic.
We didn't do this Jeff that got costs, we obviously look at where the business is going and changed our organization, particularly on the television side, but I'm excited about the business being kind of adjusting the new cost base and as we grow revenue side, that's going to help.
And then the obvious other one that really was the fact that it hasnt been affected during the pandemic as our parks business, which normally is a really really great business, but obviously during a pandemic when you close it is not a good business.
It's going to be choppy getting open again as things surge and come back in and so forth, but it's hard not to get excited about our parks business. You know the demand is there we're seeing that in Orlando, we have no international travel yet, which is significant part of the business and we still are adding capacity.
The capacity, we've set for ourselves based on safety protocols every day.
Just reopened Hollywood and we're seeing the same thing in Hollywood.
Japan has obviously gone back and forth, but but we're excited long term about that park in Beijing coming and the other thing that's happened during the pandemic as we've continued to build traction. So we are hitting the rich part of the market with some pretty exciting attractions in each of our in each of our parks, we have Nintendo which we think is one of the.
Great attractions that we've ever built in Japan and come in Beijing as well.
We have out in Los Angeles, our new pets attraction.
Giving stellar reviews and people love It and then.
Most excitingly to me, we have a new roller coaster in Orlando called the velocity Costarring Jurassic Rollercoaster, which I wrote a couple of weeks ago. It is both spectacular and Petrifying and I think when we opened net to the public in June it's going to be another driver for our business I'm very excited about the parts business, but one businesses come back.
So strongly from the depths of the pandemic.
And maybe it's Michael I'll just jump in after the and put it all together because I think the ultimate question was whats happens with free cash flow over time, what's our confidence and I think as we've been saying pre COVID-19 for a couple of years and my tenure.
We've been investing in it we love our businesses, we've been investing so they stay relevant and strong.
Years into the future and while free cash flow is always lumpy as you are in different periods of time.
<unk> been confident that we are going to grow free cash flow in the years ahead on a multiyear basis COVID-19 gotten the way, obviously that story, but thats as you recall, what we felt pre.
Pre COVID-19 and I continue to feel that way as.
As we sit here now and as everybody just chimed in I think we see the light at.
At the end of the tunnel of COVID-19 and you know.
All of the earnings power of our businesses that we were felt were there before COVID-19 I think these results say that there is still there and perhaps than some.
Thank you.
Thanks, Jim Makena.
And our next question Paul.
Your next question comes from the line of Doug Mitchelson with Credit Suisse. Please go ahead.
Oh. Thanks, so much I guess you know maybe these are two quick ones, but Dave on your side, the new wireless pricing does that suggest another investment round in wireless or would you just look at that is consistent with the focus on trying to drive share there ultimately.
What's the wireless strategy and what are you, hoping the new pricing levels to accomplish it.
Jeff just path for Peacock monetization with engagement coming in double expectations. My guess is you haven't seen much difference relative to your revenue expectations because of the limits on advertising can you just remind us when does that advertising inventory get opened up to new advertisers and how we'll be caught a monetization progress from here.
Hugh.
Hey, Doug Doug This is Dave I'll start.
So our wireless strategy has been very consistent also and the new unlimited plans are an opportunity for us to improve that value proposition.
We still have by the gig now introducing unlimited Doug.
I'm not going to be a material shift in the investment side there'll be some but not not material.
Just a great addition to the portfolio and yes.
We've talked about it was important for us to accelerate we think it's good for broadband it is helping broadband we see the results in terms of churn and.
And it's just a growth engine for us period, So really happy about the 278000 lines.
Most line additions in a quarter since we launched it grew revenue 50% achieved profitability.
We're focused across the board in terms of everything that we said we wanted to do and this is one piece of it so focusing on every sales channel.
And.
This is.
I was just going to be consistent with our approach of probably a bit more packaging with broadband and mobile, but that's not really different than anything that we've been talking about doing so.
Soft it's early with the unlimited stuff, but it's a we're.
So we're very encouraged and we like their our complete suite of products that we have in the marketplace.
Hey, Doug This is Jeff So let me just take the opportunity with your question maybe spend a minute or two on Peacock and just provide a little bit more granularity and.
How we're doing.
More broadly than your question so first of all.
We are very pleased with our steady growth on Peacock and we're particularly pleased that we chose this business model, which is an AD supported cable.
Bond model for the business. It was the right decision to pursue that clearly for our company are.
Our revenue in that model as a mix of both subscription revenue and AD revenue and if you actually breakdown, but drive the AD revenue in the future is really four things we track the first thing is.
As sign ups I think Brian mentioned in his opening that we reached 42 million sign ups is up $9 million from last quarter.
And we're very pleased not just with that growth, but with steady growth in that over time as we've added things.
Okay.
<unk> metric is how many of those people who sign up and use the service on a regular basis, we internally use a metric known as MAA is which I think others in the industry also use monthly active accounts, that's how many households actually use it monthly it's either to.
To be granular as either somebody who pays the household.
Reid subscription fee or somebody who uses it monthly.
By that basis, roughly a third of our sign ups are.
Our metrics Maa's.
And.
To put that in the context that is about a third of where Hulu is today, we've only been national for less than a year, who is then.
13 years. So we're very pleased with how that has grown steadily and MAA as the way, we track them actually kind of understate the engagement because.
There are many people who use it but just not enough to be an MAA. If you actually made it quarterly.
Assumption, then we'd be up to another $10 million above that number so one of the upsides for us as converting those non MAA sign ups to <unk>, which we think will do over time.
The third metric is usage, which is very strong double our projections.
And to put that in context, the peak and average Peacock MAA is using <unk> got more than an average television viewer is watching NBC. So we're very pleased with that and then finally, how do we monetize those users and usage is the CPM, which gets to your question we set out as you've mentioned in the sponsorship models.
The majority of our revenue coming out was set up by 10 charter advertisers.
But we actually are exceeding the guarantees that we made to those advertisers. So we are already even this quarter selling some of the excess inventory.
On a spot basis, and we're achieving cpm's that are equal or in some cases above what we're getting on NBC Prime which is our gold standard that's very encouraging and to answer your question in Q4 of this year, that's when the sponsorship deals roll off and we start selling all of our inventory on a spot basis, but were in early <unk>.
Ages, the upfront right now so we're already starting to talk to advertisers about maintenance upfront commitments.
That included Peacock.
<unk>, let me just mention one other thing all of this success is without most of the programming that we had anticipated.
Anticipated launching with the Olympics, we have not had with two Olympics in the next seven months are going to do some pretty exciting things on Peacock with our Olympics programming and then even though we're back in production as Mike mentioned or Brian mentioned on 30 shows right now most of those have not had peacock yet so the strength of our original programming.
That we had planned to launch with is really coming in future quarters. So very.
Encouraged by <unk> going forward very steady growth, so far and we're confident about the future.
Thank you Paul.
Thanks, Doug Regina, we can take the next question.
Your next question comes from the line of Ben Swinburne with Morgan Stanley.
Good morning.
One on cable one on Sky, maybe for Dave or David Brian. Thank you for the comments in the prepared remarks on the network.
As you know Theres a lot of focus on symmetric offers particularly in Washington, and I'm just wondering from a business point of view do you think there is real demand there and.
What kind of timeline should we be thinking about.
In terms of adding that that capability or more of that capability to your network and can you talk a little bit about what that might mean for capital intensity, which I'm sure is what most investors are focused on.
And then for Dana, Yes, Theres been an unbelievable amount of kind of tectonic shifts in the European sports landscape. Just this year and you mentioned Sky Syria can you just put all of this in context. When you look at the Bundesliga deal what we're reading about with the EPL ceria as this is helpful to sky hitting its EBITDA target.
What's a doubling over time or is this a headwind can you maybe just because it is obviously massive contracts can you just talk a little about the soccer background I'd be grateful for all of us. Thank you.
David Why don't you talk a little bit about symmetrical sure hi, Ben So.
Yes.
As you know I'll focus for us over the next several years, but.
Overall, our approach our strategy is to continue to enhance broadband completely and that you won't have the best overall.
And the marketplace that go from to the house of the business.
Great Wi Fi coverage within the where people are.
Troll streaming now mobile as part of the overall solution and making it all seamless. So it's the overall experience that we're focusing on but we continue to improve speeds along the way.
20 years in a row of constant increases in terms of speeds and we address both the downstream and upstream let me put usage in perspective and in terms of what we've seen pre pandemic.
Most certainly through the pandemic, where our network at the moment and then some but putting usage emperor prospective upstream is less than a 10th of downstream and so namely application, whether it's video streaming whether it's gaming.
Host of education applications.
Our network is I think really stood up and as Brian talked about earlier and so while our competitors are spending heavily to try to catch up to US you know we've already you know.
They're testing and we're not standing still we've done too.
Two gigabit download speed for testing symmetrical one gig.
And so we have an architecture that I think is going to continue to put us in position to do it in an effective and a very efficient capital efficient way.
So again not standing still so we feel very good about the long term architecture because of DOCSIS DOCSIS three one that we have.
Is very.
Strong roadmap that we can deliver and so right now as we sit here we have one dot two gigabits deployed throughout our entire footprint, we've upped your increase the upstream speed.
And so over time I think we can address now symmetrical.
Issues, but in the near term to mid term.
We are in a very good position and I do not see a.
The incremental need for upgrade in terms of capital we constantly invest in the network as it is not something that just happened overnight, we invest all the time and we're making our infrastructure more efficient as we virtualized things like CMT.
Suez.
And we're just taking cost out of how we deliver this couple that with the great DOCSIS standard I think we're in a pretty good position. So.
Broadband commercial and residential is growing.
Great business.
We're going to continue to strengthen our lead position and I.
I think it's going to continue to be a great return on investment for us and we just did.
<unk> to accelerate our plans and our our.
Our capex anticipate intensity might be a little bit higher one year versus the other but we're still going to be in the ballpark of what we've been doing and it's just not going to be.
Uptick by an immaterial amount so I feel very good about our position and I really like our long term roadmap.
Helpful.
And this is Dana.
And thanks very much for your question. There has certainly been a lot of noise around oriented football in Europe over the past four six weeks.
But if you put it all into context, what I would say is that Sky has had a very good track record of renewing sports right and we're generally feeling good that that track record will continue and we think there is Premier League. The last renewal, we made a deliberate choice to reduce our investment at 15%, we still secured an improved net right.
And Glen did linger.
The upcoming season, we continue to hold all of the rights to the very best team that we were able to secure a discount to our previous contract in theory I think it just demonstrates that we will walk away when we feel the economics don't work.
More importantly, and to Brian and the periscope a day.
I would underscore that sky's been uninsured Neil for over 15 years to really expand our value proposition beyond sport and that's worked extraordinarily well and I think it comes through in that performance.
Business the fundamentals are in the right place our customers are taking more products and services.
Our viewing is up significantly on sky channels, our churn is significantly lower sky streaming is growing considerably in the aggregation platform is really working as Brian mentioned with two customers in the U K.
We feel very very comfortable that the business fundamentals are very well positioned across all of our markets.
We like the position that we're in and we feel confident we can continue to build and grow on these fundamentals. So I think the core of your question is do we remain confident in our ambition to double the EBITDA over the next several years.
And I would say, yes, we do remain confident in that ambition and I would say that based on our confidence in a range of factors strong bounce back that we're already seeing after the effects of COVID-19, our ability to continue to use the retail engine to drive the customer base and reduced churn through aggregation and our strategy.
Multi service bundles.
Very good disciplined cost focus the team is executing very well secured content supply and really a diversification of that to our expansion into originals and exclusives has worked very well and we still see a lot of.
Strength in the U K growth opportunities. So all of that gives me.
A lot of confidence to say, we're on track for ambition of doubling EBITDA over the next several years.
Thank you.
Thanks, Dan. Thank you Hannah can we take the next question.
Next question comes from the line of Phil Cusick with J P. Morgan. Please go ahead.
Hey, guys. Thanks, Jim I guess, a couple of follow ups here Brian.
As Ben said, thanks for the detail on broadband and clearly it's not just about speed. It's interesting that when the market is worried about competition you guys are raising the bar on yourself for adds.
The mix of drivers that you see between strong market growth and share shifting.
And then second on mobile it looks like Youre hiring a lot of people in that business, probably getting ready for for our network sales can you expand on where that network effort is headed.
So let me start Dave why don't you also feel free to jump in on.
Dave gave pretty complete answers on broadband.
We do believe that.
Net by having the best product.
I think we have that.
You are in the enviable position and so we balance.
Constantly looking at new technologies, where competitors might be coming over the last.
15 years, we've had lots and lots of fiber competition, we've had lots of.
Overbill competition DSL competition, we've added 20 million broadband just in an over consistent period of time and.
So I think we know how to compete we go for market share and we do that while we're able to.
Increase the EBITDA and free cash flow from the business, we've really focused on the business sector Havent talked a lot about that today they.
They had a great quarter.
And real momentum.
All businesses are reopening people rethinking their relationships and we have the latest greatest best technology.
And youll be hearing a lot.
Or I think from our business services unit.
In wireless.
Just to add to all the points, Dave made about our focus on mobile.
Well, yes, we bought some spectrum and we'll be doing some trials to to see how we can offload.
And that really will prove to be a cost savings.
If we get it right.
In dense areas.
Whole relationship requires a healthy partnership with with our wireless <unk> and indications of Horizon. We were really pleased with the partnership we restructured it so that we're able to make these unlimited offerings in a way to use our profitability March and.
Real value for consumers and in a way that horizon, just happy that their network is getting used so.
Could work to our team that worked hard to horizon's team for it.
Bringing great too.
Offerings to the market with Xfinity mobile so net net I think both of those important to products that we now bundled them together.
Put us in a position to continue to grow and be able to compete with where the world evolves itself.
Thanks, Brian.
Thanks, Paul.
The next question Greg.
Your next question will come from the line of Craig Moffett with Moffett Nathanson. Please go ahead, yes.
Yes, Hi, a question for David if I could too.
Two actually first.
Can you talk about how your your cable segment is preparing for federal stimulus and and how you think that's what impacts that is likely to have on your business can you quantify at all what you expect to come from stimulus, including how many essentials customers you have and whether you.
We expect those customers to now generate higher ARPA under the stimulus plan and then on the wireless business I just wanted to drill down on a question that was asked before with the new pricing do you think that you can still be.
EBITDA positive in that business, even with the new pricing, which presumably will mean at least somewhat lower <unk> going forward.
Well, thank you Greg.
So.
First on stimulus.
There probably will be some non pay benefit.
And that there are a couple of different ways it could play out but.
Voluntary churn and non pay churn.
Been consistently.
It's been running low for the past year and been trending lower pre pandemic.
So earlier churn performance was regardless of when stimulus checks were received.
It could be some little bit of additional support around that but I think you have to look at the longer term trends.
Performance overall reflects what we've been talking about it.
Building a great network.
And improving the products.
Instantly. So I think there could be just a little bit of non pay support but again, we're already doing fairly well there in regards to wireless.
I think in terms of EBITDA and net new pricing.
The way that we think about this.
This is a long term growth opportunity certainly for broadband we've talked about it but when you look at the overall marketplace Hugh.
Feel we feel good about you know that where we have a little over 3 million lines.
Less than 2 million customer relationships mobile relationships out of a pool of $33 million.
Customer relationships, so Luke penetration lots of runway. So we always take a look at any of our approaches to cat key categories. We take a very disciplined approach towards packaging and improving value and so yes, we feel very good about unlimited as part of the portfolio.
And not changing the strategy or the materially the results in terms of.
<unk> and mobile and the impact towards EBITDA. So overall.
Again, Brian mentioned it.
We really appreciate and <unk>.
Verizon relationship it's important for us.
And I think we're good for them very good for them and it's a so it's a good win win for us to be able to add this new.
Set of unlimited to already strong portfolio. So feel good about our ability to continue to drive healthy EBITDA with it.
Thank you.
Thanks, Craig.
Thank you Jim next question please.
Next question will come from the line of John Hodulik with UBS. Please go ahead.
Great. Thanks, guys couple of follow ups for Jeff.
Jeff lots of news in terms of sports rights in the U S. As well with you guys, adding WWE NFL deal and not renewing NHL and shut down of NBC. Sportsnet. So can you talk about your strategy going forward and maybe what were some of the drivers of those decisions and then also back to Peacock.
The big DTC platforms are obviously spending sort of multiples what peacock is on content.
Realize those are fundamentally different services.
Should we expect the strategy the strategy to evolve over time.
With potentially further investment to capture growth in engagement or do you guys think you guys are fully capturing the opportunity at current level. Thanks.
Yeah. Thanks, John Let me, let me take them in order so.
First of all we're really thrilled to continue our NFL relationship that was an important one for us VNS.
The NFL really kind of encompasses what we want and sports rights. It is obviously very important for our traditional business number one show on prime time for over a decade.
Alan Chris now drove reason, Michael Ricoh and our talent. We're that is a very important tentpole for our existing business at the same time as the business evolves and moves to streaming and on demand.
That deal also gave US a lot of Comcast and now we can use on peacock and our other platforms, whether it's the simulcast of games and exclusive games or additional rights to show highlights. Another footage, it's really the perfect deal with the Premier sport in the U S. So that really is kind of our model. The Olympics is the same thing where we have rights.
To use content across multiple platforms same thing with golf, which is an important tent pole for us and will continue to be aggressive and look for or is that not only we can get for a price that we think we can get a return on but also.
Bob properties, where we can we can drive usage, both linear and digital and WWE is kind of the perfect. One on that where we were able to.
Take a franchise it was already important to us on USA and our linear networks and the extended across in the peak out in a way that's been very successful so.
So we're thrilled with our portfolio now continue to be opportunistic buying opportunities that match all of those things.
Turning to Peacock spending I think it is important to recognize that we really have.
Mark Lazarus has laid this out pretty well, we want to build our television business to match what consumers are doing consumers are suite are watching content across a variety of different platforms not just linear.
Just streaming but lots of different ways and our spending really should be looked at in that context, not just what we're really spending on peacock, but what we're spending across our whole portfolio and when you look at that we match up pretty well.
Versus our.
Competitors.
And with Peacock, we actually don't as I mentioned earlier, we don't even have the benefit of most of the spending that we had planned because of the production delays with COVID-19. So at.
At the moment, we're pretty pleased with the content, we have on Peacock and the content that's coming in future days.
And as I've said before with the success of Peacock and I think Brian mentioned in his opening we have a lot of options going forward and we'll continue to watch the way the world changes and our product evolves and we'll evaluate those options.
Great. Thanks, John.
Thank you John Mccain and we have time for one last question.
Our final question comes from the line of Michael Rollins with Citi. Please go ahead.
Thanks, and good morning.
If you could share how much of the programming spend within the NBC you is exclusive to your platform whether created by the CEO of live Sports news and where do you see that mix going over the next few years, especially as you look to expand the reach of the <unk> platform.
Sure.
Yeah. Thanks, Doug.
I would say virtually all of our programming the vast majority of our programming is exclusive.
The exclusivity of programming is very very important.
To us and that's not just the traditional exclusivity, whether it's an SNL or.
Or a drama, but it's the exclusivity of our Rachel Maddow every night on MSNBC or exclusivity of our of our various sports properties, most notably the Olympics so no exclusivity.
It is critical when you look at programming not just in <unk>.
NBC, but across new digital platforms do I don't know if that answers your question, but virtually all of our programming.
Thank you.
Hey, Thanks, Mike and I just want to thank all of you for joining us on our first quarter 2021 earnings call. We hope you all continue to stay healthy arm sales.
Thanks, everybody.
There will be a replay available of today's call starting at 12 o'clock PM Eastern time, It will run through Thursday may 6th at midnight Eastern time, the dial in number is 85585905, Steve and the conference I'd number is 518008.
A recording of the conference call will also be available on the company's website beginning at 12 30 P M Eastern time today.
Includes todays teleconference. Thank you for participating you may all disconnect.
Okay.
[music].
Paul.
John.
[music].
Yeah.
[music].
Rich.
[music].