Q4 2021 Comcast Corp Earnings Call

January 27, 2022

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Hello.

Good morning, ladies and gentlemen, and welcome to Comcast's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode.

Note that this conference call is being recorded I will now turn the call over to senior Vice President Investor Relations Ms. Martie <unk>. Please go ahead, Mr I've occur.

Thank you operator and welcome everyone. Joining me on this morning's call are Brian Roberts, Mike Cavanagh, Dave Watson, Jeff Shaw, and Dana strong, Brian and Mike will make formal remarks, Dave Jeff and Dana will also be available for Q&A. 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 subject to 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.

Let me turn the call over to Brian Roberts for his comments Brian .

Thanks, Marcy and good morning, everyone.

We just reported a strong fourth quarter to end of year that hit a number of important financial milestones.

In 2021, we generated record high revenue EBITDA, adjusted EPS and free cash flow with contributions coming from across the company. These.

These results reflect our resilience strategic decision, making and disciplined approach to capital allocation, which is driven by a relentless focus on growth and creating long term value.

I am incredibly proud of how we've navigated through the past two years amid the meek and ongoing challenges posed by the global pandemic.

We've been able to quickly pivot when necessary in order to continue offering world class connectivity entertainment and experiences while simultaneously prioritizing the health and wellbeing of our customers guests and employees.

So now turning to the specifics.

Our broadband centric businesses residential business services and wireless helped drive 11% adjusted EBITDA growth and 190 basis points of organic margin expansion in cable and.

And while the quarterly cadence may have come in differently than we expected, we added $1 1 million customer relationships and one 3 million net broadband subscribers.

<unk> total customer relationships to $34 2 million and total broadband subscribers to $31 9 million as of year end.

And wireless are unique and recently enhanced relationship with horizon enabled us to bring a more competitive offering for our wireless customers, but also improve the economics for us, resulting in our largest annual growth in wireless lines, yet, while reaching profitability on a standalone basis for the first time since launch.

The recovery of our theme parks is truly remarkable.

We just reported the most profitable fourth quarter on record with demand, especially high in Orlando, which had the best quarter in the company's history for any quarter.

I'm, even more excited for our newest theme park epic universe, which is in construction as we speak.

Hollywood in Osaka are also on a great trajectory and we just opened universal Beijing, which will provide a more meaningful contribution in the years to come.

We also accomplished a lot on the content side.

We are back to normalized levels of programming and production at both NBC, you and Sky.

We successfully renewed a number of sports rights agreements, including the NFL Bundesliga PGA Tour Premier League and others, which provides us great visibility for the next several years and we're monetizing IP through creative new Windows.

I'll share more detail on peacock in a bit.

But 2021 was a fantastic year for our fast growing streaming service, which has outperformed our high expectations.

At Sky, our UK businesses maintained wonderful momentum with very strong trends across all metrics, including customer relationships, <unk> and churn and fueling sky's full year EBITDA growth of 10%.

Germany is showing signs of a successful recovery and in Italy, we are managing the impact of the transition in our sports rights, even better than we had expected.

Finally on 2021, I'd like to highlight the strength of our balance sheet and the increase in the amount of capital returned to shareholders.

Hit our leverage goals a bit earlier than we had anticipated during the pandemic, which enabled us to repurchase $4 billion of stock. The majority completed in the back half of the year.

And including our dividend we returned a total of $8 5 billion.

More than double that of 2020.

Now, let me discuss our priorities for 2022.

First is broadband.

As a healthy scaled business with a structurally advantageous financial profile defined by high operating leverage and margin accretion.

We believe that the broadband market conditions in 2022, we will continue to be impacted by Covid and within this environment, we will strike the right balance between subscriber acquisition against the large and expanding addressable market as well as long term profitable growth.

On that front, we will evaluate every opportunity to increase our serviceable passing.

Even more so than we have in the past we will take advantage of the natural progression of new household and business formation as well as the potential subsidies from the federal state and local governments to expand into unserved areas.

We will also aggressively compete for market share through our strategy of bundling products around broadband so that every customer in every segment has plenty of choice at the right price.

Convergence with Xfinity mobile will play a big role.

In terms of marketing, how our sales force operates packaging and the overall interface, we have with our customers scaling. This business is a key focus for us in 'twenty two and beyond.

And we will do everything we can to continue to improve the experience for our customers and maintain the high levels of retention that started well before the pandemic.

Our AI technologies, and digital service tools enable us to resolve issues without a call or visit.

In fact, this past quarter total calls handled by our agents decreased 18% year over year and truck rolls declined by 16%, while we continue to grow our customer base and increased our NPS scores.

Broadband connectivity has never been as important as it is now to all of us and people increasingly expect more than just speed.

They also want innovative products that are easy to use and consistent and reliable service throughout their home. That's what we deliver we have an incredible network, but what differentiates us even more is the ecosystem. We've built around this network. We have spent the last several years developing the right processes finding the right Tech.

<unk> and hiring the right people. So that we can execute at great scale I'll share a couple of tangible examples to illustrate this.

We're moving aggressively on a path to 10 G, while maintaining our level of Capex intensity.

It's still early but we already are out in the marketplace with our new technology and higher upload speeds and some of the markets and we will continue to expand this in 2022 and beyond.

We also just launched the first Wifi six <unk> gateway truly the first DOCSIS 4.0 device with the capability of delivering multi gigabit speed.

Our goal is to continue to innovate on top of this and further widen the gap between the in home experience that we offer versus any of the competition.

Priority number two is peacock.

Premium video consumption continues to increase across the industry.

Currently approaching 600 billion hours per year in the U S up from 350 billion hours annually and the broadcast led here of the early 19 nineties.

We have also seen that the average household spend on video continues to grow by over 10% since 2014 alone which is constantly expanding the addressable market.

NBC Universal has played a significant part in this ecosystem.

Ranking as the number one TV portfolio audience and number two film business and box office with incredible engagement.

Today <unk> reaches over 100 million U S households, which is nearly 80% of the population every quarter.

Of that 100 million Nielsen reports that nearly 60 million households watch at least 10 hours of our content every single month.

That's more households than our competitors and both linear TV and streaming.

When we introduce Peacock to you back in early 2020, our vision was to launch a streaming service that offers premium content and is supported primarily by advertising.

We've learned so far is that we started with the right business model.

With over 300 million hours of content consumed on Peacock per month, the engagement with our platform has proven extremely valuable to advertisers.

We also realize the importance of diversity when it comes to genres and so we added sports we introduced early access movies, and we started ramping up some originals.

Behind these investments, we found ourselves well on our way to exceeding the MAA and revenue targets. We initially discussed.

In fact at the end of 2021, we had $24 5 million monthly active accounts in the U S where about 75% of the guidance we've provided for 2024.

Within these $24 5 million MAA as our over 9 million paid subscribers approaching $10 in paid <unk>, which includes the advertising.

And that is without much focus on paid subscriber growth.

We have another 7 million highly engaged bundled subscribers from Xfinity and other top distributors, who use Peacock every single month and currently receive Peacock premium at no extra cost.

We expect strong conversion of this group to paid subscribers over time.

We've accomplished all of this despite our movies and NBC content still premiering on other streaming services through the end of 2021, including HBO in Hulu and.

And with the majority of our best content still to come.

We just started including the NFL or pay one movie deal kicks in this year and we have a growing number of originals in the pipeline.

Our research indicates that 80% of consumers prefer an AD supported service over our higher cost AD free <unk> offering.

We see this in our customer mix with the vast majority of our paid subscribers choosing the $5 paid Eva tier over the $10 tier without ads.

You combine this with the fact that our paid subscribers have much lower churn and significantly higher engagement.

And we think the most valuable and state for Peacock is to have two revenue streams.

And so while we will continue to leverage the more than $20 billion of programming spend we already have across NBC you in sky we.

We are committed to reallocating and increasing investment on top of this to drive further growth in paid subscribers, which we believe is the right path to creating long term value.

I couldnt be more excited about the momentum we are seeing with peacock in the U S as well as the international opportunities ahead.

In late 2021, we introduced Peacock on Sky in the UK and Ireland.

That earlier this week, we announced the rollout of Germany, and Austria and plans are in place for our own Sky Showtime joint venture to launch later this year.

Next our company's third priority for 2022 is to monetize and expand the reach of our proprietary global technology platform and our addressable customer base.

In October we launched Sky glass in the U K and X class in the U S. Both build upon our investments in X, one flex and Sky Q.

This year, we will continue to evolve this strategy to incorporate more markets additional partners and new distribution outlets.

I look forward to updating you on our progress.

Our fourth priority is to continue to have a positive impact on society and the communities we serve.

Big part of that work is our commitment to the Eni and digital equity.

A decade ago, we created Internet essentials, which has become the nation's largest low income broadband adoption program and we have recently expanded our efforts with the launch of lift zones, where we brought pre Wi Fi to more than 1000 community centers around the country.

These are just two examples of how our teams have come together to help connect more people to the tools and resources they need to succeed in a digital world.

So I am really proud of our many accomplishments in 2021 and extremely optimistic about the opportunities that lie ahead for our company.

I firmly believe that our integrated strategy with the assets capabilities and talent. We have today will continue to drive growth across our businesses and create long term shareholder value.

Nick.

Thanks, Brian and good morning, everyone I'll begin on slides four and five with our consolidated 2021 financial results.

Revenue increased nine 5% to $33 billion for the fourth quarter and 12% to $116 4 billion for the full year.

Adjusted EBITDA increased 17% to $8 4 billion for the fourth quarter and 13% to $34 7 million for the full year.

Adjusted EPS increased 38% to 77 per share for the fourth quarter and 24% to $3 23 for the full year.

And we generated $3 $8 billion of free cash flow for the fourth quarter and $17 $1 billion for the year on a reported basis, which includes a $1 $3 billion benefit related to the tax impact of the bond exchange we completed in August .

$620 million of which fell in the fourth quarter as well as we have roughly $1 billion from returns on investing activities most of which occurred in the fourth quarter.

Excluding these items free cash flow was $14 8 billion for the year.

Now, let's turn to our business segment results, starting with cable communications on slide six for.

For the fourth quarter cable revenue increased four 5% to $16 $4 billion.

EBITDA increased to seven 8% to $7 1 billion and net cash flow grew nine 2% to $4 5 billion.

For the full year, we grew customer relationships by $1 1 million with 169000 net additions in the fourth quarter.

Overall customer growth continues to be driven by broadband where we added one 3 million net new residential and business customers for the year and 212000 in the fourth quarter.

Our net adds this quarter reflect the continuation of lower overall marketplace activity, particularly move activity compared to historical trends.

While this resulted in lower connect volumes it also.

Due to high levels of customer retention with broadband churn improving to the lowest rate for any fourth quarter on record.

Broadband was also the largest contributor to our cable revenue growth with broadband revenue, increasing eight 5% in the quarter driven by the strong net additions over the past year as well as healthy growth in average revenue per customer.

Moving to wireless revenue increased 40% driven by growth in customer lines and higher device sales.

Overall, we added $1 2 million lines for the year and 312000 lines in the quarter. The best results since launching this business in 2017.

Bringing total mobile lines to $4 million.

As Brian noted over the past year, we have made tremendous strides fully integrating wireless into our core cable operations, achieving standalone profitability of $157 million this year.

Now that we've crossed strongly into profitability and the business is deeply integrated into our core cable operations, we won't be disclosing standalone wireless EBITDA going forward.

Business services revenue increased 11, 5% or approximately 7%, excluding the acquisition of <unk>, which closed at the beginning of the fourth quarter.

Our strong organic results were driven by customers, taking faster data speeds higher attach rates of our advanced products and rate increases on some of our services as well as the continued growth in our customer base, which grew by 63000 net new customers over the past year with 17000 additional.

<unk> in the fourth quarter.

For video revenue declined one, 2% driven by customer net losses totaling $1 $7 million over the past year, including 373000 in the fourth quarter.

Partially offset by higher average revenue per customer.

This higher revenue per customer was driven by the residential rate adjustment, we implemented at the beginning of 2021.

Which we believe was also a driver of video subscriber losses.

We implemented a similar rate increase earlier this month. So we expect this trend to continue throughout 2022.

Last advertising revenue decreased 12, 5%, reflecting lower political advertising compared to record levels in last year's fourth quarter.

Excluding political advertising was up 9% with modest growth in core and double digit growth in advanced advertising.

Turning to expenses cable communications fourth quarter expenses increased 2%.

Programming expenses decreased one 2%, reflecting a decline in video customers, partially offset by higher rates.

As we enter 2022 programming expenses should reflect the benefit of fewer contract renewals combined with the impact from our anticipated decline in overall video customers.

Non programming expenses increased four 1% and were flat on a per relationship basis, reflecting investments to drive organic growth in the business as well as the expenses related to our recent acquisition of <unk>.

The primary driver of the year over year change was technical and product support which increased about 10% largely related to growth in our wireless business and was partially offset by lower bad debt and customer service expense.

Cable communications EBITDA increased seven 8% to $7 1 billion for the fourth quarter and cable EBITDA margin reached 43, 4%, reflecting 130 basis points of year over year improvement.

We believe we are striking the right balance by continuing to invest in our growth businesses, which are driving the top line and proving to be a great return for us while at the same time continuing to increase our operating efficiency and take unnecessary costs out of the business.

All of this together should enable us to drive higher profitability and expand margins both in 2022 and thereafter.

Cable capital expenditures increased three 7% in the quarter and four 9% for the year, resulting in Capex intensity of 10, 8% our lowest full year on record and essentially in line with 2000, Twenty's, 11% driven.

Driven by lower spending on customer premise equipment and support capital, partially offset by higher spending on scalable infrastructure and line extensions.

As we noted on our call in July we expect our cable Capex intensity will remain around 11% for the next few years as we continue to increase the number of homes and businesses that we pass and accelerate our investment in the technology that will enhance the overall capacity of our network both downstream and upstream.

This is a direct step to DOCSIS, four dato, which allows for multi gig symmetrical speeds essentially with the software update providing very little to no disruption to the home in a very capital efficient way.

Now, let's turn to slide seven for NBC Universal.

Starting with total NBC Universal results revenue increased 26% to $9 3 billion and EBITDA decreased six 8% to $1 3 billion.

Media revenue increased eight 4% to $5 8 billion.

Driven by higher distribution and advertising revenue with a significant contribution from Peacock.

Distribution revenue increased 12%, reflecting higher rates post the successful completion of several carriage renewals at the end of 2020.

And a growing contribution from peacock due to our growth in paid subscribers parse.

Partially offset by subscriber declines at our networks.

As a reminder, beginning in the first quarter of 2022, we will lap these carriage renewals.

Advertising revenue increased 6%, reflecting higher pricing, which benefited from our strong upfront and a growing contribution from peacock.

Which was only partially offset by ratings declines and a difficult comparison to record levels of political advertising at our local stations in last year's fourth quarter.

Media EBITDA decreased 49% to $721 million in the fourth quarter, including a $559 million EBITDA loss of Peacock <unk>.

Excluding peacock media EBITDA decreased to 24%, reflecting higher costs associated with more sporting events at our regional sports networks compared to last year, when the NBA and NHL delayed the start of their seasons due to COVID-19.

As well as higher TV programming and marketing costs, driven by the return of our full schedule compared to last year. When our schedule is impacted by COVID-19.

This difficult cost comparison will continue in the first quarter.

Before moving on I want to build on Brian's comments regarding peacock.

In 2021, Peacock generated revenue of nearly $800 million and an EBITDA loss of $1 $7 million, which includes content spend of over $1 5 billion.

Even with a relatively limited programming slate, we've achieved a level of success and Maa's paid subs and engagement that is driving our decision to double our content spend on peacock in 2022 to over $3 billion.

With the goal of ramping domestic content spend to $5 billion.

Over the next couple of years.

Some of which will be incremental and some of which will be a reallocation from linear programming.

For 2022, while we expect a significant step up in revenue the incremental investment we are spending in both content and marketing and service will likely result in an EBITDA loss of roughly $2 5 billion.

While the timing of when Peacock breaks, even maybe pushed out from where we originally expected we.

We believe pursuing a dual revenue stream is the right strategy to create long term value and given the strength in our theme parks and high margin linear businesses. The good news is that we will fund this pivot out of NBC Universal's cash flows.

Moving next to studios revenue increased 36% to $2 4 billion, but EBITDA declined 34% to $51 million.

This decline was driven by the timing of our film slate, partially offset by growth in TV content licensing.

Film has a multi year business model with titles monetize over time as they transition through different theatrical and licensing windows.

As a result of pausing film releases in 2020 during the pandemic, we had fewer new titles come into the licensing window in the fourth quarter compared to a year ago and.

And at the same time marketing costs were higher as we released sing too and Halloween kills in theaters.

This impact of fewer carryover titles and higher year over year marketing costs associated with more theatrical releases will begin to diminish as we move forward, but we will continue to pressure EBITDA growth for the next few quarters.

Last at theme parks revenue increased by $1 2 billion to $1 $9 billion, and we generated EBITDA of $674 million, which was our highest on record for any fourth quarter driven by strong momentum in the U S and Japan.

At our U S parks, we benefited from strong domestic attendance and per caps that we're above pre pandemic levels.

At Universal Studios, Japan, we saw improved attendance levels as government mandated capacity restrictions were eased during the quarter.

At our newly opened park Universal Beijing, We are pleased with our first full quarter of operations, where the level of demand from our guests was high but overall attendance was impacted by COVID-19 related restrictions.

Despite that <unk> EBITDA was essentially breakeven in the quarter and we anticipate modest profitability in our first full year of operation in 2022.

For total theme parks, while we've been very pleased with the pace of our recovery, particularly in the U S. We recognize that the business is subject to variability related to the pandemic, which tends to be more pronounced at our international parks.

Now, let's turn to slide eight for Sky, which I'll speak to on a constant currency basis.

For the fourth quarter Sky revenue decreased two 5% to $5 $1 billion as solid growth in the U K was offset by our results in Italy, where we continued to transition through the change to our series broadcast rights.

Direct to consumer revenue decreased 1%, reflecting a modest decline in average revenue per customer relationship and overall customer relationship additions of 61000 in the fourth quarter.

This gain mostly came from a meaningful increase in streaming subscribers, primarily driven by seasonally strong entertainment content as well as a widely viewed sports schedule.

The higher level of streaming additions in the quarter more than offset the level of customer losses, we experienced in Italy, which were also better than we had anticipated.

In the U K direct to consumer revenue increased mid single digits, driven by continued healthy customer additions supported by record low churn and higher average revenue per customer.

Revenue growth benefited from growth in broadband and wireless streaming and hospitality as pubs and clubs revenue has recovered back to 2019 levels.

This was offset by a decrease in customer relationships and average revenue per customer in Italy, both mainly due to the change in our series broadcast rights.

Rounding out the rest of the revenue content revenue declined 23% driven by the change in sports licensing agreements in Italy and Germany.

And advertising revenue increased 1% with healthy growth in the UK and Germany, mostly offset by a decline in Italy.

Turning to our EBITDA results Sky's EBITDA increased 188% to $464 million driven by our strong performance in the U K and improvements in Germany and Italy.

Overall, the results reflect lower sports programming costs due to resets and our sports rights, partially offset by a change in sports rights amortization, which resulted in an increase of $130 million.

As a reminder, we announced this change last quarter. It did not impact our full year results, but it does impact the quarterly pattern of recognizing sports rights amortization cost with expenses higher in the first and fourth quarters and lower in the second and third quarters.

I'll wrap up with free cash flow and capital allocation on slide nine.

As I mentioned previously in 2021, we generated around $15 billion in organic free cash flow, excluding the items I referred to earlier.

Consolidated total capital increased three 6% to $12 $1 billion, largely driven by higher investment on our broadband network.

Looking ahead to 2022, we expect cable capex intensity to stay around 11% and NBC Universal Capex related to the construction of epic universe to be up around a $1 billion.

Working capital was $1 5 billion for the year of $1 3 billion increase over last year's level, reflecting a post COVID-19 ramp of investment in studio content and our broadcast of the Summer Olympics.

But less than we originally expected largely due to the timing of content spend at both NBC, Universal and sky and a faster than expected recovery of theme parks.

Turning to capital allocation, we ended the year with net leverage at two four times and we returned a total of $8 5 billion to shareholders, including $4 $5 billion in dividend payments and $4 billion in share repurchases.

For 2022 as I said previously we expect to continue to maintain leverage at around current levels, which I expect will support continued strong capital returns.

As we announced this morning, we are raising the dividend by <unk> <unk> to $1 eight per share our 14th consecutive annual increase and our board of directors has increased our share repurchase authorization to $10 billion.

This capital allocation policy will allow us to maintain the balance we've talked about investing organically in the businesses, maintaining a strong balance sheet and returning capital to shareholders.

So thanks for joining us on the call. This morning with that I'll turn it back to Marci, who will lead the question and answer portion of the call.

Thanks, Mike Regina, let's open up the call for Q&A. Please.

Are using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again, if there are any questions Press Star then the number one on your Touchtone phone.

Your first question comes from the line of Ben Swinburne with Morgan Stanley .

Thank you and good morning.

I'd like to ask a question about the sort of first two priorities, Brian that you laid out at the top so on broadband.

You talked about a balance between volume and rate obviously, the environment is tricky right now and maybe Dave you could talk a little bit about your philosophy on pricing.

Bundling with wireless whether theres, an opportunity to sort of let wireless pull broadband through.

And how you think that sort of segmentation activity can help net adds at any expectations. We should have about net adds for 'twenty two would be would be helpful.

And then I think for Jeff.

Obviously.

After Netflix last week, the market's view on streaming is called <unk> and <unk>.

No surprise.

You guys seem to be pacing on <unk>, well ahead of where you thought back when Steve presented the thesis of couple of years ago can you put sort of the business plan.

In front of us a little bit more so we can understand the incremental investment at the kind of returns you expect and how does this translate into sort of growth for NBC.

The company over time, so we can get a little more context around your decision to step in this much.

Thank you guys.

Thanks, so much and good morning.

So I think demand let me just start higher level with what I think our principles are and then Dave can get into the specifics of some of the more detailed that question for broadband.

Demand just keeps going up that's the importance of the product and I think we're incredibly well positioned to service our customers and monetize on the investments that we want to make and the industry penetration has continued to expand.

Despite that we think we have a long runway for growth.

We still believe with about 50% penetration in our footprint.

Leaves us with the long part of the field to keep going and we also are expanding the field because we're able to grow the footprint and grow the addressable market as I talked about given.

Extensions in government subsidies in some of the investments by the government in broadband and we are going to evaluate every opportunity we have to accelerate our path things. So from here I expect the growth's going to be fueled by the strength of the network focused on innovation and product differentiation, we're going to continue to improve our products to be best in class increase our speed.

And always enhance the customer experience and so.

Our ability to compete and segment the customers and do it throughout the entire market not just regionally I think these are all the advantages we've got and we're I think we're going to keep growing but Dave why don't you go into some of the pricing and volume in some of the questions had been.

Sure Hey, Ben So let me start with trends you asked about that and.

So we're seeing a lot of the same trends we experienced at the end of last year.

With connect activity remaining lower than what we experienced towards the end of last year and one of the key drivers other than seasonality just not being as normal one of the key drivers of this is lower move activity.

And when you look at external move data, which we track very closely compared to 19. This move data track fairly closely to our connect our indexing. So however in terms of training. The great News is churn churn is at record lows and continues to get better so.

One other thing in terms of trending is our focus we talked about.

Go after every segment and we're going to also make sure we're competitive in the income constrained segment. So it's early.

But I think we've done a nice job marketing the benefits of the new ACP program. So in terms of trending that's where things stand right now mobile I think it's a very good point and totally agree are mobile is key.

For us in and of itself is a great growth opportunity, but it's also very important to broadband we've talked a lot about broadband churn benefits that continues but we wanted to bring mobile value to ebb.

Every segment and every offer so as we segment the marketplace and broadband whether it's standalone broadband relationship, which is fine, but we're going to talk about broadband and mobile and every single product and offer construct we will deliver that and we're simplifying.

And converging mobile offers just to make sure every single sales channel is optimized to deliver on these offer construct so look more in 'twenty, two but more of that as we go throughout the year and then last but not least is pricing.

In terms of broadband we've had a very consistent approach to broadband pricing, we've been competing for a long time and all sorts of different competitive environments, and we focus on different levels of broadband speeds.

We focus on innovation and surrounding broadband with it.

Product enhancements that are embedded within broadband like flex you get security coverage, great Gateway devices, we just tested a device that points towards longer term, where we can deliver.

Four gigabits in this trial.

The symmetrically.

And down so we have a long road map of innovation that we feel very good about that dual eventually go into pricing.

But our general approach is a holistic one in that we are not we focus on every single product area, but it's the total bill that we look at and so that is our main focus leveraging speed tiers.

<unk>.

Always look at the total customer bill and from that perspective, we're a little bit lighter on broadband.

Last couple of years, including this year.

And as we're in video we take a little bit more in video because of the carriage renewals you can see our pricing approach as we balance just to your initial point share and rate. We think we have a good formula we'd be competing like this for some time and we feel good about this approach going forward.

Hey, Matt It's Jeff So let me just give a little bit more color on peacock, so going back to when we did our investor day, which is just over two years ago. We believe that the best model for US was an AD supported.

The model and we are we plan to offer and we did offer back at that point, when we launched three different ways to get Peacock day free Eva supported.

Model, a light for 99 light advertising.

Supported dual revenue stream model with some more premium content and then we offer also offer a 999 S. Bud.

At the time, we believed that the free Eva product would kind of be are our most popular and our leading product. What we've found is that consumers are voting with their feet and the vast majority of them are choosing the middle model that for 99 model with.

Pretty more premium content and a light AD load AD load that's much later than linear in much later than some of our competitors and that's resulted in some of the numbers that Brian and Mike laid out our MAA is or.

24, and a half which is 75% of the way to where we thought we'd be in 'twenty. Four back then we haven't really focused on paid subscribers and we're already over 9 million people paying us real money.

And when you add the fact that in Comcast's territory and some other of our distributors. We offer this premium product bundled for free and over time those will convert to pay that's a pretty favorable.

A favorable model and our ARP, who has resulted in you know it has as has responded I think in our Investor day, we expected to get to $6 $7 in <unk> and we're already approaching 10 is as Mike said in his comments so.

This is really favorable for us and what we've done is we've invested behind this as Brian said, So we've you know.

Put some more money into bringing our content back or pay one movies, especially from HBO, which are going to be coming back later this year, and that's resulting in and the greater investment in the greater losses that were laid out but we think also greater returns because this model. This dual revenue stream model really mirrors, our existing business and we think that the.

Peak investment year will probably be 23.

Based on our plans and then the revenue growth will overtake the investment growth then we'll start turning positive.

The most important thing to keep in mind is that we're playing really a different game than our competitors. We really believe that peacock is not a separate business for us. It's an extension of our existing business dual revenue stream. We are organized in our TV business. So that we run all of them together as one business we program together as one business.

Picking the right model for each of our pieces of content that maximizes that and we think over time, that's not just going to bleed to good growth on peacock, but it's going to lead to our television business. Once we hit that peak investment period on Peacock returning to growth overall, so that we're.

As Brian said in the outset, we're number one on NBC. We're number one on news where our studio is really strong we are in my opinion, the top content company in the world and we're using that strength along with our our business model to really play a different game and screaming that everybody else is and we're really pleased with our performance so far.

Thanks, everybody.

Thanks, Ben Regina, we'll take the next question please.

Next question comes from the line of Phil Cusick with J P. Morgan.

Hey, guys. Thanks.

So one follow up and then a separate question.

First on the pickup side I think you have an opportunity to pull content back. This year does it make sense to do some of that that's part of this.

Excellent.

Is it more organic and then second on capital return you have about $10 billion buyback authorization do you think that's a good guide for 2022 or do you think it could be substantially different just given what you've outlined today. Thanks very much.

Jeff why don't you start with the Hulu question. Yeah. Thanks. Thanks for the question. So so obviously much of our strong NBC content as Brian mentioned premieres on on Hulu and over time, we'd like to bring that back to peak out.

But any discussions that we're having with Hulu or will have with people that were really not going to comment on so there's nothing really to report at this time.

Thanks, Jeff So Phil so on on capital return I would not take the authorization of $10 billion as a guide of anything not trying to send a signal there that the level that the board last authorized we use some of that up and we wanted to top it up as we started the year and as you know it's easy.

For us to go back win win called for and quickly get greater authorization. So what I'd tell you to think about as we talk about capital return and buybacks.

As Brian and I and all of US here have been talking about our excitement in the imperative of getting back into balance where strong capital return through dividends and buybacks, which has been a hallmark of this company over decades and decades would be back on the table.

Along with keeping the balance sheet is strong and obviously.

Prioritizing, making high returning investments in our business, which we talked a lot about what's going on on that side on the call.

Earlier, so I think it sets us up to be at the place. We're at now back in balance with leverage at two four and I would point everybody not to a number I expect us to buy back, but rather the leverage level that I expect us to stay at which is around this level of two four times I think that is going on.

This company up for in 2022, and beyond very strong capital returns and the number you guys all.

Come up with is really just a function of.

During your model for your own.

For your own growth I think we're gonna grow EBITDA, but there's a variety of views there and I think we enumerated a lot of the areas from epic the parking theme.

<unk> Park in Orlando to Jeff's commentary in my commentary on expected losses of Peacock as we invest there yet that has to be funded out of cash flows that the business itself NBC media will generate so we think that's a very thoughtful way of funding the pivot to future growth in the.

Media side to name just a few so and obviously capex intensity of cable maintaining at around the 11, 11% level. I think is an important element for people to think about with <unk>.

Dave having talked six months ago on this call about what he wanted to do to drive towards DOCSIS, four O, which I think sets our network up for the.

In the future. So that's why I got for you on capital return hopefully hits at all for everybody.

Thank you just follow up on one thing you mentioned that.

You mentioned that working capital was a little lower in 2022.

'twenty one than you expected.

How should we think about 'twenty two versus 21. Thank you.

I said that could be.

<unk> quip Youre guess is as good as mine, but really it's a hard number to forecast goes obviously as we get back post COVID-19 and ramp up some production I might tell you to expect it to trend in a little bit higher than then it was get back more towards 2019.

But I said that last year and it didn't happen. So I will leave it to the point that I'd say its a number thats.

We're obviously when we spend money on working capital, we're expecting to get a good return but.

I think it's somewhere in the range of where it's been you know last year. The range would be where we were last year or higher up to where we were in 19 pre COVID-19 , but.

Im not in a position to give you a prediction other than give you some color. Thanks, Mike.

Alright. Thanks Regina next question please.

Your next question comes from the line of Doug Mitchelson with credit Suisse.

Oh, thanks, so much one for Brian one for Dave Brian .

TD what should we expect the next few years as guideposts for what you would consider success with connected television efforts and now that you have some learnings early learnings with Sky glass <unk> glass.

Do you have all the assets you need to be as successful in CTV is as you would like to be.

Dave on the wireless side.

<unk> indicated yesterday, what investors already thought which is that the overheated wireless market net adds would slow in 2022.

Does that dynamic or would that dynamic of slowing wireless market impact the pace of net ads and promotional strategy for for Comcast.

David as part of that now that you've reached a full year.

Profitability in that business should we think the strategy going forward is to sort of invest in customer acquisition and sort of maintain breakeven or slight profitability or even though you're not reporting any more what should we expect margins to continue to improve on the wireless side of the cable business. Thank you.

Okay, there's a lot in there.

And Dana I may come to you in a moment I'll just comment a little bit about connected in the early days of Sky glass and just maybe in general how you see it sets us up for the future, but but I think that's the big picture answer that I would give Doug.

Doug is that we see people connecting to our network.

And a variety of ways in the future.

Generations of customers have different needs. So from the great New Wi Fi device that Dave just talked about.

Two what we can do with a new platform.

Whether that gets.

You into telemedicine gaming education.

Above and beyond all the entertainment that news.

That we're doing today and so when you play with Sky glass or a connected TV you see.

The potential opening up it also creates the potential for partnerships with companies that want to use that platform when extend their own products to different ways.

Relevancy for us with consumers and our early learnings have been I think pretty spectacular so Dana why don't you take a minute and just.

But what you'll hear about Sky glass also can relate to eventually X class Tvs, but.

Dana.

What are you.

Thanks, Brian and thanks, Doug for the question, we appreciate it very much.

I'll just start by saying really clean 12 months and how sky performed in 2021.

Like to highlight landing EBITDA.

10% growth rate really underpinned by the U K, which continues to perform very well with growth in EBITDA revenue and customers.

Turn.

Head out of Covid here and we also have made the adjustment in our sports right strategy very successfully in Italy, and Germany with both entities.

Following our expectation so I would say overall confidence in the sky business as we walk into 2022.

Good day.

Very confident about our growth prospects and part of that.

April to glass glass is this will be our first full year in glass launched in the fourth quarter last year it had before.

We are excited about it because it opens up more headroom for us so.

And what I mean by that is first it opens up new customer segments as we move into an IP based service.

Is that the opportunity to sell to customers that previously couldn't have the service because they werent allowed this is it opens up new customers, who are large streaming focus and value conscious customers.

The cost of the <unk> into a monthly low cost price point like the mobile phone model. It opens up in value conscious segments for us.

Important to kind of say that this is a really good retention product business at 48, 24 48 under contract at <unk>.

Existing customers and it really deepens that relationship with them. So we're feeling really good about how its appeal to new customer segments to ensure that the existing customers second big source of value for us.

And your ability to make a margin on equipment.

New headroom for us.

Third area for Us and Brian referenced a new platform <unk> that is a new platform for innovation for future services, whether that indication to new markets like our Fox Hill deal in Australia.

Services like fitness watch together games and other things we've got in the Hopper, we're feeling like that's becomes a continuous source for innovation to either drive retention or launch into revenue stream.

It is.

So I'll start so we've got a great reaction from the market early in the.

Launch phase will focus on.

I think customer base, our most loyal customers as we always do.

And Sky, we're really excited as we head into quarter, one to open it up to general market.

And really start to step on the pedal for.

So as we enter into 2022, and we really feel it's guy is in a strong position and we think that glass is really off to a strong start we're feeling good across all of our products in market and we think glass is a really important growth opportunity for the organization for other reasons, we just touched on Brian .

Go ahead, Dave.

Thank you Doug a couple of things and just following up quickly on Dana's point.

Very excited to the cable group in the U S to focusing on that global tech stack and being able to pull off the connected devices.

And over time, we will be opportunistic with it with Dana is doing.

And that we were leveraging our organizations just brought over from Sky working both with Sky and with cable for Asia Sterling, that's looking across at all product innovation and now not only video, but also broadband and that global Tech stack is really important for us ex class television.

It's early but every single <unk>.

Aggregation point will be converged over time, so I think that's a real leverage opportunity.

On your point on wireless.

I think the biggest thing Doug is that Theres, just so much upside for us.

The way we look at it every single broadband home is an opportunity in every single broadband home should have at least a couple of lines. So to me the <unk>.

<unk> market expands and as we continue to build out and add more homes just more opportunity. So we go after a converged approach with broadband and mobile.

It's a real opportunity to drive share in and of itself mobile is a great product, but when you add it together. It just gives value to every single segment. That's unique to us that we can do differently. So to me 22 is a year of optimizing that as I mentioned earlier.

We're going to take every single sales channel simplified our go to market approach with mobile included for every segment, whether it's income constrained radon up there'll be a mobile component and everything that we do.

So I think that's just a really big opportunity over time and you look at it from an operational standpoint, one bill one app converged features in an hour leveraging Wi Fi.

Theres a lot of opportunities for us in mobile and by the way we just.

Launched it and business services and small business and we're having great early success. There. So mobile I think will impact just about everything we do one last thing just a quick clarification for folks when I was talking about trending.

It was I was talking about not the last quarter of course, I meant worse than 2019, 2020, but just to clarify that.

Helpful. Thanks, Matt next question please.

Our next question will come from the line of Jessica Reif Ehrlich with Bank of America Securities.

Thank you Julie.

We see your questions I'm first theme.

As the division, which seems to have the most upside for the company and once demand turns it tends to be like a pent up demand for ear. So can you give us some color on like what what's the underlying what's going on underneath the surface international visitors coming back yet.

How much more leverage do you.

Thank you will have in the parks and what's the timing of the epic Universe opening and then the second question I just wanted to follow up.

That's good to follow up on Peacock.

As you guys said you came out of the gate with a different strategy, but a lot has happened in the last two years with increasing global competition can you just talk about your longer term goals do you want to be a global platform.

You seem more focused on profit and.

You know versus some of your competitors.

How do you think about I guess, Jeff said, managing the TV business as one unit. So how do you think about differentiating content among your different.

Businesses.

Yes.

Thanks, Jessica So let me let me take those kind of in order. So first of all it's impossible not just to be excited about our theme park business. We had a great year, we had a great fourth quarter as Brian mentioned and really across all of the all the metrics of that business. We haven't seen any impact of omicron in Florida for example.

And very limited impacts, which we seem to be passed in Hollywood in Japan, So everything's kind of going in the right direction.

And even as we start the first quarter continuing in that direction I think part of that by the way is because we continue to invest in our our attractions during the pandemic as Brian also mentioned with lots of coaster in Orlando and pets in Hollywood and Nintendo which is doing really well in Japan has led that park to rebound really really quickly.

<unk>.

So.

All signs are pointed up in our theme park business and I agree with you. We have a lot of growth ahead, our international visitation has not returned to what it was historically would be weed in Florida. We generally are in the low thirties right. Now were just above 20 with most of that visit visitation now coming from the U K and Europe Latin America Hasnt returned yet so we have upside there is people.

Continue to increased travel and we're also I should mentioned very happy with Beijing, which is open people love The park in.

When travel opens up in China. After the Olympics, we are really optimistic of that park long term. So so everything is going going.

Well and then trending in the right direction epic is full steam ahead or.

Down there a couple weeks ago.

And.

And the construction is going really well and I think we've said this in the past, but we expect that part to open in 2005.

And certainly in time for the summer of 'twenty, five and we'll be back to you and everybody when we get more granular on the date.

On that point, if I look back over Covid, one of the things I wish we could redo was slowing down epic because I agree with your both what you are saying and with your point. Jesse. This is a business that if you build wonderful attractions. There is pent up demand and we're going to make a fabulous park at epic and we're full steam we're going as fast as we can now to make up for lost time, yes.

Turning to Peacock. So so let me just first say that that we believe as everybody else does that you need global scale ultimately to compete in the streaming business that that is clear both in terms of your content spend in your technology and brand spend.

Like everything else, we're taking a little bit different approach than than everybody else first of all if you look at where we are today.

Just like Comcast put their shoulder into peak domestically to get us where we are without sky, we would've been a much different place with Sky, which is launched peacock in the UK and Germany. Thanks, Dana and is launching in Italy. Later this year combined with the Sky Showtime joint venture that we have we believe those all of those territories get us with you.

<unk> to 70% of the overall streaming market because remember you can't launch streaming in places like China, There's parts of the world that just doesn't work. So the real question is how we get to the next 30% and we're going to be disciplined about it we're going to look to partnerships and really on a bespoke country by country basis of how we.

We expanded internationally and we're going to get to global scale, but we're going to look to do it really in probably in a more measured.

Country by country way and optimistic that.

That we can get there and then lastly.

A question on content is an interesting one we believe very strongly that windows matter and the content business windows matter in the movie business mood windows matter in the TV business when.

When you when you take a piece of content and you put it on different platforms, sometimes you get a new user base, which then feeds into demand back in your original.

Platform and we're going to use the strength of our pet platform to optimize across each piece of content and give each piece of content. The biggest chance of success. So it's not really a science, it's more of an art, where we think content can work and and Youll see content four moths going across multiple platforms and multiple ways and.

And we'll really look at it for each each piece of content, whether it we think it can drive peacock subscription, which will start on peacock or whether we think it can drive reach and we will start an NBC or some of our linear platforms. So hopefully that answers your question.

Thank you.

Thanks, Jessica Regina, we have time for one last question.

Our final question will come from the line of Craig Moffett with Moffett Nathanson.

Hi, This is daily on for Craig Moffett, Thanks for taking the question.

Im Brad broadband could you talk a little bit about what youre seeing competitively in the market, whether it's fixed wireless or fiber and then in the context.

Share buybacks can you give any color on the expectation of peacock content spend.

In terms of incremental versus reallocation that you mentioned earlier in the call.

And then it sounds like you're doing a bit more edge outs on the cable side.

In terms of pace and icon on Capex, there as well thank you.

It's Mike on the last two.

Peacock, we kind of covered the color there the expectation that.

So this year with the investment net of what gets reallocated will be a peacock loss of $2 5 billion is the likely number we think and then on cable 11% Capex intensity that we talked about is all in for the fall all the initiatives David described.

So on competition.

Really hasn't been a new.

Notable shift in the competitive environment from either fiber or fixed wireless is still very competitive.

Plenty of activity going on in terms of overbuilding.

We've been at it for quite a while.

By the way included including fixed wireless where the earliest market launches. It's almost three years. Since we've competed against those early launches in fixed wireless so.

Our game plan is to anticipate where and how competition happens we are constantly evolving playbook.

And at work.

The key point is we're growing penetration, where we compete against both fiber and non fiber so.

We take it seriously.

We look at each one of the areas all the varieties of overbuild fiber and fixed wireless and our goal and the game plan is to focus on our ubiquitous network advantage that we have not looking at our competitors' so often at a very.

Local level have to make trade offs on their network decisions. Our DOCSIS four at auto DOCSIS game plan is a very robust one puts us in position to deliver in capacity and speeds on every application. That's out there. Our goal has always been I mentioned earlier to develop a better.

<unk> product and deliver it that is very different from our competitors, where you just add value and now including mobile, but we just have a different broadband product that's better in terms of the overall speed and coverage and Wi Fi when you pull it all together the net of that is a ubiquitous better product and we're delivering more passing.

And so as competition talks about that we're adding passing and did a really nice job. The last handful of years and we'll continue to do that so our goal is to stay ahead of every single application that's out there and deliver the best broadband service and we feel like we're in a good position.

Great that will conclude our fourth quarter 2021 earnings call. Thank you everyone for joining us. Thank.

Thanks, everybody.

There will be a replay available of today's call starting at 12 o'clock PM Eastern time and will run through Thursday February 3rd at Midnight Eastern time, the dial in number is 858.

59056, and the conference I'd number is 69886 to a recording of the conference call will also be available on the company's website beginning at 12 30 P. M. Eastern time today. This concludes today's teleconference. Thank you for participating you may all disconnect.

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Good morning, ladies and gentlemen, and welcome to Comcast's fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. Please note that this conference call is being recorded.

Now I'll turn the call over to senior Vice President Investor Relations Ms. Martie <unk>. Please go ahead Mr. <unk>.

Thank you operator and welcome everyone. Joining me on this morning's call are Brian Roberts, Mike Cavanagh, Dave Watson, Jeff Shell and Dana strong.

And Mike will make formal remarks or gave Jeff and Dana will also be available for Q&A. 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 subject to certain risks and uncertainties and.

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 SaaS, Let me turn the call over to Brian Roberts for his comments Brian .

Yeah.

Thanks, Marcy and good morning, everyone.

We just reported a strong fourth quarter to end of year that hit a number of important financial milestones.

In 2021, we generated record high revenue EBITDA, adjusted EPS and free cash flow with contributions coming from across the company.

These results reflect our resilience strategic decision, making and disciplined approach to capital allocation, which is driven by a relentless focus on growth and creating long term value.

I am incredibly proud of how we've navigated through the past two years amid the sneak in ongoing challenges posed by the global pandemic.

So now turning to the specifics.

Our broadband centric businesses residential business services and wireless helped drive 11% adjusted EBITDA growth and 190 basis points of organic margin expansion in cable and.

And while the quarterly cadence may have come in differently than we expected, we added $1 1 million customer relationships and one 3 million net broadband subscribers, bringing total customer relationships to $34 2 million and total broadband subscribers to $31 9 million as of year end.

<unk>.

And wireless are unique and recently enhanced relationship with Verizon enabled us to bring a more competitive offering for our wireless customers, but also improve the economics for us, resulting in our largest annual growth in wireless lines, yet, while reaching profitability on a standalone basis for the first time since launch.

The recovery at our theme parks is truly remarkable.

We just reported the most profitable fourth quarter on record with demand, especially high in Orlando, which had the best quarter in the company's history for any quarter.

I'm, even more excited for our newest theme park epic universe, which is in construction as we speak.

Hollywood in Osaka are also on a great trajectory and we just opened universal Beijing, which will provide a more meaningful contribution in the years to come.

We also accomplished a lot on the content side.

We are back to normalized levels of programming and production at both NBC and Sky.

I'll share more detail on peacock in a bit.

But 2021 was a fantastic year for our fast growing streaming service, which has outperformed our high expectations.

At Sky, our UK businesses maintained wonderful momentum with very strong trends across all metrics, including customer relationships, <unk> and churn and fueling skies full year EBITDA growth of 10%.

Germany is showing signs of a successful recovery and in Italy, we are managing the impact of the transition in our sports rights, even better than we had expected.

Finally on 2021, I'd like to highlight the strength of our balance sheet and the increase in the amount of capital returned to shareholders.

Hit our leverage goals a bit earlier than we had anticipated during the pandemic, which enabled us to repurchase $4 billion of stock. The majority completed in the back half of the year.

And including our dividend we returned a total of $8 5 billion more than.

<unk> that of 2020.

Now, let me discuss our priorities for 2022.

First is broadband.

She has a healthy scaled business with a structurally advantageous financial profile defined by high operating leverage and margin accretion.

We believe that the broadband market conditions in 2022 will continue to be impacted by Covid and within this environment, we will strike the right balance between subscriber acquisition against a large and expanding addressable market as well as long term profitable growth.

On that front, we will evaluate every opportunity to increase our serviceable passing.

Even more so than we have in the past.

We will take advantage of the natural progression of new household and business formation as well as the potential subsidies from the federal state and local governments to expand into unserved areas.

We will also aggressively compete for market share through our strategy of bundling products around broadband so that every customer in every segment has plenty of choice at the right price.

Vergence with Xfinity mobile will play a big role in terms of marketing how our sales force operates packaging and the overall interface, we have with our customers.

Scaling this business is a key focus for us in 'twenty two and beyond.

And we will do everything we can to continue to improve the experience for our customers and maintain the high levels of retention.

Started well before the pandemic.

Our AI technologies, and digital service tools enable us to resolve issues without a call or visit.

In fact, this past quarter total calls handled by our agents decreased 18% year over year and truck rolls declined by 16%, while we continue to grow our customer base and increased our NPS scores.

Broadband connectivity has never been as important as it is now to all of us and people increasingly expect more than just speed.

Also on innovative products that are easy to use and consistent and reliable service throughout their home. That's what we deliver we have an incredible network, but what differentiates us even more is the ecosystem. We've built around this network. We have spent the last several years developing the right processes finding the right.

<unk> and hiring the right people so that we can execute at great scale.

Sure a couple of tangible examples that illustrate this.

We're moving aggressively on a path to 10 G, while maintaining our level of Capex intensity.

Still early but we already are out in the marketplace with our new technology and higher upload speeds and some of the markets and we will continue to expand this in 2022 and beyond.

We also just launched the first Wi Fi six gateway truly the first DOCSIS 4.0 device with the capability of delivering multi gigabit speed.

Our goal is to continue to innovate on top of this and further widen the gap between the in home experience that we offer versus any of the competition.

Priority number two is peacock.

Premium video consumption continues to increase across the industry.

Currently approaching 600 billion hours per year in the U S up from 350 billion hours annually in the broadcast led here of the early 19 nineties.

We have also seen that the average household spend on video continues to grow by over 10% since 2014 alone which is constantly expanding the addressable market.

NBC Universal has played a significant part in this ecosystem.

Ranking as the number one TV portfolio audience and number two film business and box office with incredible engagement.

Today <unk> reaches over 100 million U S households, which is nearly 80% of the population every quarter.

Of that 100 million Nielsen reports that nearly 60 million households watch at least 10 hours of our content every single month.

That's more households than our competitors and both linear TV and streaming.

When we introduced Peacock to you back in early 2020, our vision was to launch a streaming service that offers premium content and is supported primarily by advertising.

We've learned so far is that we started with the right business model.

With over 300 million hours of content consumed on Peacock per month, the engagement with our platform has proven extremely valuable to advertisers.

We also realize the importance of diversity when it comes to genres and so we added sports we introduced early access movies, and we started ramping up some originals.

Behind these investments, we found ourselves well on our way to exceeding the MAA and revenue targets. We initially discussed.

In fact at the end of 2021, we had $24 5 million monthly active accounts in the U S where about 75% of the guidance we have provided for 2024.

Within these $24 5 million Maa's are over 9 million paid subscribers approaching $10 in paid <unk>, which includes the advertising.

And that is without much focus on paid subscriber growth.

We have another 7 million highly engaged bundled subscribers from Xfinity and other top distributors, who use Peacock every single month and currently receive Peacock premium at no extra cost.

We expect strong conversion of this group to paid subscribers over time.

We've accomplished all of this despite our movies and NBC content still premiering on other streaming services through the end of 2021, including HBO in Hulu.

And with the majority of our best content still to come.

We just started including the NFL or pay one movie deal kicks in this year and we have a growing number of originals in the pipeline.

Our research indicates that 80% of consumers prefer an AD supported service over our higher cost AD free S fought offering.

We see this in our customer mix with the vast majority of our paid subscribers choosing the $5 paid Eva tier over the $10 tier without pads.

You combine this with the fact that our paid subscribers have much lower churn and significantly higher engagement.

And we think the most valuable and state for Peacock is to have two revenue streams.

And so while we will continue to leverage the more than $20 billion of programming spend we already have across NBC you in sky we.

We are committed to reallocating and increasing investment on top of this to drive further growth in paid subscribers, which we believe is the right path to creating long term value.

I couldnt be more excited about the momentum we're seeing with peacock in the U S as well as the international opportunities ahead.

In late 2021, we introduced Peacock on Sky in the UK and Ireland.

That earlier this week, we announced the rollout of Germany, and Austria and plans are in place for own Sky Showtime joint venture to launch later this year.

Next our company's third priority for 2022 is to monetize and expand the reach of our proprietary global technology platform and our addressable customer base.

In October we launched Sky glass in the U K and X class in the U S. Both build upon our investments in X, one flex and Sky Q.

This year, we will continue to evolve this strategy to incorporate more markets additional partners and new distribution outlets.

I look forward to updating you on our progress.

Our fourth priority is to continue to have a positive impact on society and the communities we serve.

Big part of that work is our commitment to DNI and digital equity.

A decade ago, we created Internet essentials, which has become the nation's largest low income broadband adoption program and we have recently expanded our efforts with the launch of Lyft zones, where we brought pre Wi Fi to more than 1000 community centers around the country.

These are just two examples of how our teams have come together to help connect more people to the tools and resources they need to succeed in a digital world.

So I am really proud of our many accomplishments in 2021 and extremely optimistic about the opportunities that lie ahead for our company.

I firmly believe that our integrated strategy with assets capabilities and talent. We have today will continue to drive growth across our businesses and create long term shareholder value.

<unk>.

Thanks, Brian and good morning, everyone.

Begin on slides four and five with our consolidated 2021 financial results.

Revenue increased nine 5% to $33 billion for the fourth quarter.

12% to $116 4 billion for the full year.

Adjusted EBITDA increased 17% to $8 4 billion for the fourth quarter and 13% to $34 7 million for the full year.

Adjusted EPS increased 38% to <unk> 77 per share for the fourth quarter and 24% to $3 23 for the full year.

And we generated $3 $8 billion of free cash flow for the fourth quarter and $17 1 billion for the year on a reported basis, which includes a $1 3 billion benefit related to the tax impact of the bond exchange we completed in August six.

$620 million of which fell in the fourth quarter as well as we've roughly $1 billion from returns on investing activities most of which occurred in the fourth quarter.

Excluding these items free cash flow was $14 8 billion for the year.

Now, let's turn to our business segment results, starting with cable communications on slide six.

For the fourth quarter cable revenue increased four 5% to $16 4 billion.

EBITDA increased to seven 8% to $7 1 billion and net cash flow grew nine 2% to $4 5 billion.

For the full year, we grew customer relationships by $1 1 million with 169000 net additions in the fourth quarter.

Overall customer growth continues to be driven by broadband where we added one 3 million net new residential and business customers for the year and 212000 in the fourth quarter.

Our net adds this quarter reflect the continuation of lower overall marketplace activity, particularly move activity compared to historical trends.

While this resulted in lower connect volumes. It also contributed to high levels of customer retention with broadband churn improving to the lowest rate for any fourth quarter on record.

Moving to wireless revenue increased 40% driven by growth in customer lines and higher device sales.

Overall, we added $1 2 million lines for the year and 312000 lines in the quarter. The best results since launching this business in 2017, bringing total mobile lines to $4 million.

As Brian noted over the past year, we have made tremendous strides fully integrating wireless into our core cable operations, achieving standalone profitability of $157 million this year.

Now that we've crossed strongly into profitability and the business is deeply integrated into our core cable operations, we won't be disclosing standalone wireless EBITDA going forward.

Business services revenue increased 11, 5% or approximately 7%, excluding the acquisition of <unk>, which closed at the beginning of the fourth quarter.

The fourth quarter.

For video revenue declined one 2% driven by customer net losses totaling $1 7 million over the past year, including 373000 in the fourth quarter, partially offset by higher average revenue per customer.