Q3 2022 Comcast Corp Earnings Call
Yes.
Good morning, ladies and gentlemen, and welcome to the Comcast third quarter 2022 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 to executive Vice President Investor Relations. Mr. <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, Brian and Mike will make formal remarks are 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 with that let me turn the call.
To Brian Roberts for his comments Brian .
Thanks, Marcy and good morning, everyone.
I'm really proud of the company and our results this quarter.
We are reporting adjusted EBITDA growth of 6% adjusted EPS growth of 10% and significant free cash flow, while also investing in our future and returning a record high amount of capital to our shareholders.
The strong financials today are a testament to our focus on driving profitable growth through innovation as well as a reflection on the professionalism of our employees.
Together I believe we are collaborating and executing at the highest levels, especially.
I, especially want to recognize and publicly thank all of our teammates in Florida as well as those who traveled to Florida over the last several weeks they.
They worked tirelessly to assist customers who were impacted by hurricane it even while many of these employees had their own losses.
This was a devastating storm, particularly for US as we are the primary cable operator in most of the areas where it hit and we expect this affected about half of our traditional Florida seasonal customers.
Digging into the third quarter our results at cable communications again underscored the impressive consistency in this business with 5% EBITA growth and 120 basis points of year over year margin expansion, bringing us to 45.1% our highest margin on record.
While we are still in a challenging environment in terms of depressed move activity and increased competition from new entrants.
We were pleased to see the back to school provided a tailwind and we ended the third quarter with 14000 net new broadband subscribers.
There have been four primary drivers of revenue growth at our cable segment residential broadband units.
Identical broadband <unk>.
Wireless and business services.
While we don't anticipate residential broadband units to be a significant driver for now we expect to maintain healthy growth in the other three leading to continued strong financial performance at cable for the foreseeable future.
My confidence stems from the fact that we have always been able to strike the right balance between units and profitability.
We compete aggressively while also staying focused on investing in and managing the business to deliver long term profitable growth, which is exactly what this quarter as shelf.
We have a distinct competitive advantage that goes beyond just fast and consistent speeds.
We provide a differentiated and superior experience within the home, which is the foundation of our ARPA growth.
For example, we offer reliable Wi Fi coverage in every room device control and cyber security features and a world class Entertainment platform as well as other complementary solutions like Xfinity mobile that increase the value and utility of our broadband product even more.
All of this is only getting better as we further improve our network and we're making great progress.
During the quarter, we announced that we have begun to rollout multi gig download speeds combined with up to five to 10 times faster upload speeds and we expect to have this available at 20% of our footprint by the end of this year and to the vast majority of our footprint by the end of 2020 five.
Directly on the back of this we're completing the core technical Foundation for 10 G and we're transitioning to a cloud based Virtualized network as we work towards DOCSIS, four pointed out which will enable us to deliver multi gig symmetrical speeds to customers beginning in the back half.
Up next year.
Looking further ahead the combination of our high capacity network differentiated broadband experience and our terrific M. D. N O in wireless puts Comcast in a winning position to offer in home and mobile connectivity that is both robust and ubiquitous and it doesn't involve trade off.
S, which is going to become even more important as people's level of data consumption and overall expectations continue to rise over time.
On average our broadband customers, who don't subscribe to traditional video from US are already using nearly 650 gigabytes of data per month and that's just today.
We are doing a fantastic job leveraging our wireless business, we're still in the very early growth phase in penetrating this segment and were having lot of success. We added 333000 wireless lines. The most of any quarter to date and this morning, we announced that we now have over five.
5 million Xfinity mobile lines, and we're just getting started.
So summing up we're pleased with our strong financial performance of cable we're encouraged by the long term trends and demand for connectivity and our competitive advantages and we're confident in our future growth.
At NBC Universal we saw some great momentum with EBITDA growth of 25%. Despite the tough comparison to the Tokyo Olympics last year.
Our parks segment continues to be a real standout generating the highest quarterly EBITDA on record.
Driven by growth at each of our geographies, including Beijing, which hit profitability for the first time since the Grand opening last September .
We're seeing clear evidence that the investments we made throughout the pandemic continue to pay off.
We launched Super Nintendo World in Japan, the velocity coaster in Orlando Secret life of pets in Hollywood and our drumbeat of innovation goes on for.
For example, Super Nintendo World will open in Hollywood early next year, we're adding another Nintendo themed area Donkey Kong to Japan in 'twenty, 'twenty, four and I'm, especially excited for epic universe to open in the summer of 'twenty, 25, which will transform universal Orlando into a weeklong destination.
Studios also performed exceptionally well, resulting from a huge summer box office led by Jurassic World Minions Black phone and nope.
Our leadership is driving change in the industry are flexible windowing strategy has enhanced the overall profitability of our studios business. It's also had a significant positive carryover to Peacock, which just started to benefit from our new pay one agreement.
At the end of the third quarter Peacock had more than 15 million highly engaged paying subscribers in the U S.
On top of that 15 million Peacock also had approximately 14 million bundled and free users totaling around 30 million monthly active accounts.
Peacock has become the best streaming value in the market, providing customers with a massive premium content offering across movies TV Entertainment sports and news in English and in Spanish and with less than five minutes of ads per hour for just $5 per month.
It is really a great value.
Our sports content is unmatched with customers enjoying live coverage of the biggest leagues and events, including the NFL with Sunday Night Football M. L. B Premier League Notre Dame Big 10, starting in 'twenty, two 'twenty three as well as the W. W E.
And marquee events, including Super Bowl and Olympics, French open U S open toward a France Triple Crown a later this year the World Cup.
We also provide the best of other sports with very passionate fan communities, including Indy car Super Cross and track and field.
We're seeing a nice uplift from our next day broadcast which at last or exclusively ours.
And coming up through the rest of this year and into 'twenty. Two 'twenty three is a strong slate of highly anticipated originals from proven creators, including the best span Mrs Davies poker face and others.
It only launched a little over two years ago Peacock is already an important part of our portfolio and reflects how we're running our media business Holistically.
Switching gears the U K in other European markets have been adversely affected by the Ukraine conflict as we all know higher energy costs and higher interest rates higher overall inflation and currency headwinds.
This quarter, we took a noncash charge as a result of all of this at Sky based on this environment, which Mike will talk a bit more about.
Our sky team is working hard amidst this changing economic backdrop, that's putting pressure on the average customer in the region.
We remain focused on customer retention as well as providing the best experience and value in entertainment and connectivity, which contributed to the highest quarterly customer growth since we've owned sky, including some nice momentum in our broadband and wireless business.
We are keeping an eye on churn and acknowledged that ARP, who may be affected in the future as customers deal with this unstable and inflationary environment.
We are successfully managing through a variety of measures and we remain disciplined on our cost structure, we reset the majority of our major sports rights within the last two years, they're looking for more efficiencies in a number of areas.
So looking at the company as a whole all of us are paying attention to economists and other experts view about how some of these issues in Europe may come to the U S and while we are certainly not immune to potential macroeconomic headwinds I firmly believe that Comcast is in a very strong position relative to our.
Our peers and most other companies we are a leader in very large and highly profitable markets and our healthy balance sheet and substantial free cash flow generation enable us to continue to invest organically in our strategic initiatives, while simultaneously returning a substantial amount of <unk>.
Capital to our shareholders.
We paid nearly $5 billion in dividends per year, and we bought back nine and a half a billion dollars of our shares year to date through the third quarter.
We have a great business, including a fantastic team.
Earlier this month, we announced that we promoted Mike cabin audit President.
For the past seven years, Mike has been an incredible leader partner and friend and we're both very focused on continuing to innovate and grow this wonderful company for all our employees customers and guests.
So it's my pleasure to hand, it over to Mike.
Thanks, Brian I look forward to the new role its quite an honor and I. Appreciate the trust that you and the board continue to have an Mi IMAX.
I'm excited to work with the leaders on this call Dana, Dave and Jeff and all of our colleagues to take advantage of the great opportunities for Comcast's future.
So now I'll begin on slide four with our third quarter consolidated 2022 financial results.
Revenue decreased one 5% to $29 $8 billion, reflecting the comparison to last year's quarter, which included the Tokyo Summer Olympics as well as a headwind from currency translation at Sky and our international theme parks due to the strengthening dollar.
After adjusting for both of these items, our revenue was up about 7% year over year.
Adjusted EBITDA increased five 9% to $9 $5 billion and on a constant currency basis increased about 8%.
We generated $3.4 billion of free cash flow.
And we reported an EPS loss of $1 five per share, which was mainly impacted by an impairment charge at sky.
We test goodwill annually across the company in the third quarter.
<unk> economic conditions in the U K and the other European markets have resulted in a significant increase in discount rates used in the annual impairment analysis and reduced estimated future cash flows at sky.
As a result, we have taken an impairment charge related to sky goodwill and intangible assets totaling $8 $6 billion.
On an adjusted basis, EPS increased 10% to 96 per share and on a constant currency basis, adjusted EPS increased about 12%.
Now, let's turn to our business segment results, starting with cable communications on slide five.
Cable revenue increased two 6% to $16 $5 billion, driven by higher rate and volume in residential broadband as well as growth in business services wireless and advertising the.
Strong growth in these businesses was partially offset by lower revenue in video and voice.
Total customer relationships were up 315000, compared to last year and down 21000 and sequentially in the third quarter.
Diving further into the details first our revenue growth drivers.
Broadband revenue increased five 7% driven by growth in <unk> and in our customer base compared to last year.
Broadband <unk> increased three 7% year over year consistent with the growth rate in the second quarter.
We expect ARPA growth will continue to be the primary driver of our residential broadband revenue growth in the near term.
Wireless revenue increased 31%, mainly driven by service revenue, which was fueled by growth in customer lines.
We added one 3 million lines over the last year, including 333000 lines in the quarter, which is our highest number of net additions for any quarter on record and marks the fourth consecutive quarter of adding more than 300000 lives.
Services revenue increased nine 4% or approximately 5%, excluding the acquisition of Mesa G, which closed at the beginning of last year's fourth quarter.
This healthy organic growth was driven by increases in both <unk> and our customer base.
We continue to see healthy performance across our diverse customer segments, including SMB mid market and enterprise with this quarter's organic growth driven by a mix shift to higher data speeds and increased sales of our advanced services as well as rate increases and growth in our customer base.
Advertising revenue increased seven 2%, primarily driven by political and our advanced advertising business freewheel, partially offset by a decline in our local core advertising business and the absence of our streaming business zummo.
As we previously announced zummo is now part of our joint venture with charter with those results reported in corporate and other.
If we exclude the impact of zummo cable advertising revenue would have increased to 12%.
Partially offsetting the growth from these revenue drivers with video revenue, which declined four 4% driven by year over year customer net losses, partially offset by 6% ARPA growth due to a residential rate increase at the beginning of this year.
And last voice revenue declined 12, 5%, primarily reflecting year over year customer losses.
Turning to expenses cable communications third quarter expenses increased half a percent, reflecting higher non programming expenses, mostly offset by lower programming expenses.
Programming expenses decreased two 8%, reflecting the year over year decline in video customers, partially offset by higher contractual rates.
Non programming expenses increased two 5% driven by growth in other expenses due to an increase in bad debt compared to last year, reflecting a return to more normalized levels and increased technical and product support expenses driven by growth in our wireless business as well as the addition.
Mr Jee.
These higher costs were partially offset by a decline in advertising marketing and promotion expenses, partly due to the comparison to last year, which included some Olympic sponsorship spending as well as lower activity levels.
The lower activity levels, coupled with the improvements we continue to make in our customer experience also contributed to the decrease in customer service expenses.
Cable EBITDA increased five 4% to $7 $5 billion in the quarter was cable EBITDA margins, improving 120 basis points year over year, reaching a record high of 45, 1%.
And on a per customer relationship basis, we grew EBITDA, 4% as we focus on monetizing these relationships over their lifetime.
Before moving to NBC Universal Hurricane Ian has impacted our footprint in southwest, Florida, causing outages and damage to our cable network that are cable team is still repairing.
Many of our customers homes and commercial locations were severely damaged or destroyed.
While our third quarter results were not impacted by the storm, we expect to report an impact in the fourth quarter, including net losses of broadband customers.
Now, let's turn to slide six for NBC Universal.
Starting with total NBC Universal results revenue decreased four 3% to $9 $6 billion, reflecting the difficult comparison to last year, which included $1 $8 billion from the Tokyo Olympics included in our media segment.
EBITDA increased 24, 6% to $1 $7 billion.
Media revenue decreased 23% to $5 $2 billion again, reflecting the comparison to the revenue associated with the Tokyo Olympics last year.
Excluding the Olympics media revenue increased four 4% driven by Peacock with revenue of $506 million, which more than doubled compared to last year.
Distribution revenue increased four 6%, reflecting growth at peacock driven by increases in paid subscribers compared to last year as well as higher contractual rates at our networks, partially offset by linear subscriber declines that accelerated sequentially.
Advertising revenue increased four 7%, reflecting strong increases from peacock, partially offset by a decline in linear advertising.
Media EBITDA decreased 41, 5% to $583 million in the third quarter, including a $614 million EBITDA loss at Peacock.
We continue to expect peacocks EBITDA loss will be roughly $2 $5 billion for the year with the fourth quarter's loss, reflecting the cost of new content.
Excluding Peacock media EBITDA in the third quarter decreased 21%, reflecting the difficult comparison to last year's Tokyo Olympics, as well as revenue pressure at our linear networks.
Looking to the fourth quarter, we expect media growth ex peacock to be impacted by a gradual acceleration in pay TV cord cutting as well as some deterioration in the AD market, reflecting broader economic uncertainty as well as higher costs associated with the broadcast of the World Cup on Telemundo moving.
Studios revenue increased 31% to $3 $2 billion, driven by strong theatrical and content licensing revenue.
The optical revenue more than doubled compared to last year driven by the success of our summer film slate, including Jurassic World Dominion minions. The rise of grew Blackstone and Nope. In addition content licensing was up 17% driven by the benefit of our carryover titles and.
The acceleration in film Windows, as well as healthy growth in TV licensing.
EBITDA increased $358 million to $537 million for the quarter, primarily reflecting the higher theatrical and content licensing revenue, partially offset by the corresponding higher programming and production costs.
And also the benefit of the timing of marketing cost that we incurred in the second quarter for films in the third quarter.
Last at theme parks revenue increased 42% to $2 1 billion and EBITDA increased 89% to $819 million, our highest level of EBITDA on record.
These results were driven by growth at each of our parks.
Universal Beijing, we had our first profitable quarter since opening compared to the third quarter of last year, when incurred $130 million of Preopening costs.
At our U S parks, we continue to see strong demand with attendance and guest spending increasing year over year.
In fact, Orlando broke a new record delivering its highest level of EBITDA for the third quarter. Despite the part being closed for two days due to hurricane Ian.
Universal Japan continues to rebound since capacity restrictions were lifted at the end of March and compared to last year. When the park operated under more strict COVID-19 related controls.
Now, let's turn to slide seven for Sky as I said earlier, our reported results were meaningfully impacted from the currency translation due to the strengthening dollar, but I will speak to Sky's results on a constant currency basis.
For the third quarter Sky revenue was consistent compared to last year at $4 $3 billion as low single digit growth in the U K was mostly offset by lower revenue in Italy and Germany.
Direct to consumer revenue was also consistent compared to last year, reflecting low single digit growth in the U K driven by broadband and wireless revenue offset by declines in Italy and Germany.
On a customer basis, we added 320000 customer relationships in the quarter with positive additions across all three territories, the U K, Italy and Germany.
These net additions were driven by streaming customers due to the timing of unique content and the early start of football season, including the EPL to accommodate the timing of the World Cup in the fourth quarter we.
We do not expect a similar level of additions in the fourth quarter.
Rounding out the rest of revenue at Sky content revenue increased six 4% driven by licensing our entertainment content.
And advertising revenue decreased one 6% with lower revenue in Italy, and relatively flat revenue in the UK and Germany, reflecting the difficult macro environment.
Turning to EBITDA Sky's EBITDA decreased 15, 5% to $701 million, primarily reflecting the timing of sports costs again due to the early start of the football seasons and the shift of matches into the third quarter towards accommodate the timing of the World Cup in the fourth quarter.
While this shift will benefit sports costs in the fourth quarter as four weeks of games are paused results will also be impacted by the challenging economic environment in Europe .
And we will incur higher sports costs in the first half of 2023, reflecting the higher number of games as the season has extended in the remainder of the Pas games are played.
Now I'll wrap up with free cash flow and capital allocation on slide eight.
We generated $3 $4 billion of free cash flow this quarter.
Consolidated total capital increased 24% due to increased spending at NBC, Universal and cable partially offset by a decrease at sky.
The increase at NBC Universal was driven by higher Capex at parks as we continue to invest in new attractions and make significant progress in building epic universe in Orlando.
Cable capital spending increased 17% with capex intensity coming in at 12, 2% due to timing.
On a year to date basis cable Capex intensity was 10, 4% and we continue to expect cable capex intensity to be around 11% for the year.
Working capital was $1 billion for the third quarter, reflecting the continued ramp in content creation and the timing of annual sports rights payments.
As we enter the fourth quarter and look to our year ahead, we remain focused on driving long term growth during an increasingly challenging economic environment. As a result, we expect we will be taking severance and other cost reduction related charges in the fourth quarter in anticipation of expense reduction actions that will provide.
<unk> in 2023 and beyond.
Wrapping up with capital allocation last month, we increased our buyback authorization to $20 billion up from $10 billion and during the quarter, we repurchased $3 $5 billion worth of our shares.
In addition dividend payments totaled $1 $2 billion for a total return of capital in the third quarter of $4 $7 billion.
We ended the quarter with net leverage at two three times in line with our expectations for leverage to remain around 2.4 times.
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 Operator, let's open the call for Q&A. Please.
Thank you we will now begin the question and answer session.
Have a question. Please press star and then the number one on your Touchtone phone.
Could be removed from the queue. Please press star and the number two.
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.
Our first question comes from it.
Lindbergh with Morgan Stanley . Please go ahead.
Thank you good morning.
Yeah, Brian I'd love to hear from you, how you're thinking about capital allocation given just we've had this significant increase in cost of capital and.
Investors are highly focused on where you guys are making your big your big bets in the business. How are you thinking about priorities, including M&A just given the backdrop, we're in right now and some of the macro concerns we see ahead of us.
And along those lines I mean, one of the big announcements you guys and you talked about in your prepared remarks is into the cable network around DOCSIS four so I'd love to hear from Dave.
Sort of what are the capital needs.
To get where you want to go over the next few years is that going to drive up Capex are there is there an argument to spend the money faster you know.
To help the business differentiate better in the market or how.
How do you think about the benefits to the business from getting to DOCSIS four it out over the next few years. Thank.
Thank you.
Thanks, Ben Let me just start and then kick it to Mike give.
Given his new job I'm looking for him to help on those capital allocation questions quite a bit but I think the bar is the highest it's been in terms of M&A, obviously cost of capital has gone up.
And we think our stock's attractive and have increased the buyback as Mike just said that we announced a.
Both and actions this quarter and in our board authorization. So.
You know, we feel really great about that opportunities to look at things, but we really like the company. We've got Mike why don't you do that Dave can talk about DOCSIS for sure Ben Thanks, and good morning, So I just step back a little bit and think about what we're doing capital through the lens of you know start with how we generate capital so if.
You look at this quarter you know you see we had record margins in the cable business, 45% are we had record profits in the theme parks business and record profits in the studio business is so just to call out a few examples and those are the result of us putting tremendous energy and effort and capital back in our businesses. So when we talk.
About the Formula that we've got it's always with the view to have growth opportunities in our existing businesses. So we can put capital to work and in the future get the kind of results. We've had now on the back of the investments we have had in the past. So priority one right now is to invest in the network I'll, let Dave you can expand on that but we.
Got a great path to symmetrical multi gig through DOCSIS four O in a reasonable timeframe at reasonable cost inside the envelope that we've talked about of about 11% Capex intensity. We've got theme parks with epic Universe, you know well underway, we've got investment in streaming with Peacock that Jeff.
Jeff will talk about so we're excited about putting money first and foremost our back into our businesses to drive great results for years to come and so that's that's the virtuous cycle that you see so that's step one put money back in the business to keep a strong balance sheet, we get asked a lot about that but I think when you look.
The environment. We're in I think we're happy to have what I would say is the best strongest balance sheet in the business period. So I think that's that's you know piece too and then piece three and I'm very happy with the results Brian talked about $9 5 billion of buybacks year to date, a $5 billion ish run rate of dividends for the year.
We were asked the question is over the last several years already committed and when we got back to leverage targets would we be able to would we be committed are we committed to returning capital to shareholders and we said all along that it was our highest priority to get back to that place, but to do it in the context of the Formula I. Just described so I think.
Hopefully everybody has confidence that we you know understand that we understand that formula and you all understand that formula. So as you look ahead on capital return I think we're gonna be guided as we've been in the recent past by our leverage will stay around 2.4 times leverage while doing all the things I just described.
And that will dictate you know ample amount of returned to shareholders. So that's that and then I think on the M&A side of things. It's you know we like the business. We have you know with all the opportunities we have in the businesses and the stock where it is I see us very focused on the opportunities in the business and.
And as I just described.
So I'll give david it over to Dave for DOCSIS four <unk>.
Thanks, Mike and a low band so you know one of the art.
<unk> plans have always been to consistently invest in the network I think our network is one of our core strengths and we have this ubiquitous footprint.
And we serve every segment with the I think a great round of broadband tiers, so and we're able to do things like we just announced the 20 million customers just had a speed upgrade and we've been doing this consistently so yeah. The initiatives that we have.
Sure. It's a great roadmap starting with what we've talked about mid split capability in DOCSIS and that rolls to DOCSIS four at auto and also we're going to play offense had just adding more passing so no.
We're anticipating longer term growth in broadband real opportunities in every segment and so right in terms of mid splits that we're now rolling it out right now delivering multi gig download speeds and upload speeds that are done at 200 to 300, Megabits, which is up to 10 times faster than our current <unk>.
Upload speed, so will be deployed to 20% of our footprint by the end of this year and will be by the end of 'twenty five.
It will be it will be serving the vast majority of our footprint with mid split and then on the back of this to DOCSIS four dot O will be in the market, but in the second half of 'twenty three with multi gig symmetrical speeds as Mike mentioned in the vast majority of our footprint will will begin the process in 'twenty five.
So do all of this with the Capex intensity of around 11% and we were able to do this as we virtualized key parts of the network and it's part of the roadmap to be able to do this so we'll have the most effective and efficient I think game plan in regards to the network and we're.
Also going to limit the amount of CPE change outs that are required.
Whether it's a video set top boxes gateways, we're able to just focus on serving every segment of fit effectively and efficiently so and what we're seeing it's early but we really like the customer experience benefits as we do this but it's a it's a really effective very efficient road map, we're real pleased with.
Our position to serve Ubiquitously I think.
By the way one of the big reasons why are.
Or do we have a near record low churn because our network is so solid.
Thanks, everyone. Thanks, Ben next question please.
Our next question comes from Doug Mitchelson from Credit Suisse. Please go ahead.
Thanks, So much one for Mike one for Dave Congrats Mike on the promotion on the Hurricane commentary for.
The <unk> net losses of broadband customers is there any sizing or context for how the big the hurricane impact might be and whether X hurricane there would've been a positive broadband net adds for <unk>. If I heard your comment correctly and then for Dave I just wanted to follow up on DOCSIS four point out from Ben's question I'm, just curious how would you articulate the N <unk>.
Eight for DOCSIS 4.0, based network or node versus a fiber based one there's a lot of debate as to whether DOCSIS will be fully competitive on speeds and latency.
Particularly from a consumer perception basis and is there any other benefits to an upgraded plant that we should consider relative to your operations today as you push forward. These upgrade so thank you both.
Yeah, Thanks, Doug I'll I'll, let Dave really chairman, it's his team that's doing amazing work to get the network back up in southwest, Florida. Those are our markets. They were you know like Brian said earlier, you know our plant was you know the one hit hardest.
It'll be in the tens of thousands, but we're still working on the numbers in terms of homes that you know residences that won't turn back on but we'll tell you what the number is when we get through it during the course of this quarter and you can look back at some prior hurricane experiences. It's you know typically you know tens and tens of thousands.
Hey, Doug So, yes, let me piggyback on what Mike was saying in regards to the hurricane.
Really remarkable we have just amazing teammates that respond to these moments Oh, it's just a incredible I think it's a testament, how we run the business run it very locally.
And as our teammates live and work in these communities, which we serve and so you know they were positioned to get to work almost immediately even when in some cases, they're personally dealing with situations. So we're started rebuilding and repairing right away.
Terms of just sizing it seasonally.
It will have that kind of impact that all the negative in terms of broadband, but when you look at the underlying business I think we're you know around the same as where we were in Q3. The conditions are similar in that regard.
So in terms of fiber in terms of DOCSIS that Oh, yes in state I think we have all the benefits of DOCSIS you know the the roadmap that we have and that is in terms of the customer experience in terms of multi gig speeds that are <unk>.
Let's talk about wireless if we cut a bit.
There have been reports that you've been pretty aggressively deploying strand mounted small cells to offload traffic I'm wondering if you could just talk a little bit about your your experience, thus far with traffic offload.
It is still today, mostly on Wi Fi, but.
What youre thinking in terms of how much traffic can be offloaded and and Ah is there the potential for something broader than just the <unk> strategy with with getting some of your own mid band spectrum to try to offload significantly more traffic and just what do you think the margins of that business could.
Ultimately look look like.
Hey, Craig Dave So, let me start with where we're at right now with mobile and I'll talk about the spectrum.
We really like our trajectory and mobile obviously, we had a record setting net add quarter and so we like our capital light approach, we like our position what we're able to do competitively how we surround broadband with mobile we get to play offense and we.
We also get to a package mobile with business services business services and small business is in the market now with mobile and are having its early but having great success out of it.
Gates with that so when you combine by the gig with new unlimited pricing that we have and compare it against the telephone companies, we can help customers save up to 50% and in some cases. So it's were well positioned to compete with mobile today, but as I said, so we really like her.
Our position the capital light that we have but we do view, providing enhanced five G connectivity and service areas, where we have a high concentration of traffic is a very good potential opportunity. So.
We've always been opportunistic today Wifi as a part of how we look at managing our network most of the traffic goes over Wi Fi today. So we look at the spectrum, whether it's C. B R. S or 600 megahertz spectrum is a good opportunity. So there's nothing new really to.
Talk about it but we're testing and we've talked about that before we're working closely with charter on a modeling out the potential in these high dense traffic areas and what the savings could be but no new news at this point Craig in terms of specific modeling.
But we do look at as a potential opportunity down the road.
Thanks, Matt Operator next question please.
Next question comes from Brett Feldman.
Eldon sacks. Please go ahead.
Thanks for taking the question. So you mentioned during your prepared remarks that for.
For now you would expect to have broadband <unk> growth would be the primary driver of overall broadband revenue growth, we've definitely gotten a little pushback from investors on that they look at a more competitive market in <unk>.
<unk>, having lots of other pressures in their budgets and in an inflationary environment and so what gives you confidence that you can sustain a profile of our <unk> growth. How do you think that's going to breakdown between rate increases are up selling or maybe something else. Thank you.
Well, a good question and Ed.
Part of it is our results and you look at our our results consistently that we've had in a very competitive environment. We've been dealing with you know very intense competitive activity for a long time now we've had you know fiber.
Overbuild now over just over 40% new competitive entrants and so we've been able to and part of the reason why I think we do perform well and we have a balanced approach in terms of share and our Po is we serve every segment and we break it down by every segment. So we had healthy <unk> growth of three point.
7% in Q3.
And if we look at the opportunities to focus on tier mix as an opportunity so starting with HST only and then how we package.
And we surround again, we leverage mobile to do some of the lifting in terms of value and focusing on broadband <unk>. There, we take a very balanced approach towards rates.
We do have rate increases that we managed through and we've had a segmentation is part of our acquisition plan, but it's also part of a retention plan. We have yeah, we model out retention opportunities by segment.
And so we've been very disciplined I think in terms of all of these things and so it's an opportunity for us to drive both share and balanced ARPA growth, we've been doing it over a very long time, and we anticipate competition to be very substantial.
And but we also look at the roadmap that we have and being able to leverage mobile and other services and so we're we're we like our position we've always taken a balanced approach towards <unk> in share.
Just one other point to add.
You know long term or longer term.
I continue to believe broadband is so critical it's such an important dynamic part of ours.
Our society and it's changing all the time and people want the best and the best his experience. It's speed. It's innovation, it's service and that's what we're really focused on and we've been that way and I think it's why we're have the number one position today and we want to retain that.
Thank you. Thanks, Brad Operator next question please.
Our next question comes from Michael Rollins from Citi. Please go ahead.
Thanks, and good morning.
In our cable business.
You look at the pace of video revenue would you expect the current cases video cord cutting.
At this level and how much of the losses that you're experiencing are simply a function of changing customer preferences for consumption.
Relative to the elasticity from the pricing initiatives to offset the higher programming costs.
I'll start.
This is Dave D. I anticipate you know the.
The changing nature of video to continue.
We've anticipated it.
We've looked at this we've been able to manage through it and the focus on multiple growth drivers for us in terms of broadband business services mobile.
But we also have looked at video as a broad platform opportunity. So yes, we've had.
The fluid nature of video putting pressure on the the more mature tiers of video service, but we've also offset a substantial part of that through flex we've invested in the ability to do smart TV things that joint venture with charter is an opportunity.
So we view video as an opportunity long term.
As a platform.
We will continue to focus on that and that I think that it will.
We'll balance both things, but we've navigated through I think this before but I don't I don't see it changing.
Thanks, Mike Operator next question please.
Our next question comes from Jessica Reif Ehrlich from Bank of America.
Please go ahead.
Questions one on cable I'm wondering M D C U E.
On cable you talked like I guess it was about nine years ago, when you introduced or announced the Comcast Technology Center.
Can you talk about the progress you've made in making Comcast a leading hub of innovation and how you view a comprehensive position I think he quoted like unique cross section of media and technology, how has that changed over time or evolved.
And then on NBC you I can't believe you haven't gotten questions really but what are the long term aspirations for Peacock, let's say over the next three to five years, what do you think it will look like.
Can you talk about on theme parks, the advanced bookings or visibility.
International visitors coming back yet.
Yep.
Yes, we'll take it this is Jeff Jessica Hi, I was hoping to get no question. So you broke my streak here, but.
Gonna do in reverse order a little bit here. So in the theme park business record quarter in the third quarter or first quarter ever profitability in Beijing.
And despite the economic uncertainty that you see elsewhere in the economy, we're seeing no no effects of that right now in the theme parks either in terms of our performance.
Our actual performance or our bookings going forward, Florida is really strong Hollywood's really strong Japan really ended the quarter pretty strong. So so it kind of defies logic, a little bit but part of it is based on the investments Brian outlined in his in his opening.
We're really paying off so the theme park business is really strong and we're seeing no weakness there as far as Peacock you know are our long term aspirations on peacock is for it to be to balance out our overall media business I think we've said all along that we our strategy in streaming is different than some of the premium mass by players like Netflix and Disney plus.
We view it as a part of our business, we manage it as one we make decisions on programming is one we sell advertising across the business as one <unk>.
And as viewership shifts to from linear to to Peacock, we want <unk> to get to a level of scale that that causes our business to be balanced as consumer sentiments that advertiser sentiment change and very pleased with our performance in this quarter over $15 million.
And we're right on track for what we expected to do as we've as we've built that business.
Okay, Dave why don't you start on innovation and I'll add at the end I think it's a great question Yeah. It is Jessica so.
This is the this facility is a big part not the only part but a big part.
Of how we think about long term growth and innovation and so it really when you think about the teams over there. It is culturally has changed the company I think in terms of getting multiple groups multiple teams together to work on exciting projects at <unk>.
Early changes categories.
And if you look at video what we the question before you go from you know a.
Linear video.
Livery system to a broad based platform on multiple devices. This innovation happened with teams over there being able to change broadband and to tie and Wi Fi and to be able to do it for residential and business services and being able to deliver leading gateway.
<unk> devices.
And the roadmap that I talked about from mid split to doctors, Florida auto happened over there. In addition, the teams are changing the customer experience there as well and very focused on digital and and what is possible to be able to help customers do everything over any device and so are you.
You look at where things are going you know the internet of things being out with devices and cameras being able to tie everything together. This is where you know these teams are focused on what's possible. So it really has been game changing in terms of what what we've been doing quicker.
Quickly add that post the pandemic, it's pretty exciting to walk through the technology Center and see people back at work and.
And the energy and Buzz.
But I think of ourselves as a unique media and technology company and we're focused on this this sector.
We view.
The competition has changed it includes the tech companies on the West Coast and we have been looking to add to that scale and I think we made real progress in the last 12 months.
For things like our you know voice remote which for those who have it whether you're using it for streaming service or for a video bundle.
Where to now do other things and look up your account and you know many other aspects of how voice is deeply embedded in all of our products on Sky glass globally. We now have between sky the new charter arrangement previous.
Deals with Cox and all of the Canadian operators are virtually all.
A roadmap for innovation and I think as we look forward to the company, that's what's going to keep powering what Mike was talking about the the virtuous cycle of investment and return so you.
You know we're all.
Mindful of the economy in the world that we live in but we have a pretty unique company.
And this is a big part of what I think will make it more unique in the future is to continue to try to innovate. So glad you asked that question.
Thanks, Jessica Operator next question please.
Our next question comes from Philip Cusick with Jpmorgan.
Hi, guys. Thank you and my congratulations again.
You know, we've danced around it a little bit Brian .
I wanted to ask about your sort of vision of the video ecosystem, because we see this linear acceleration to the downside.
Peacock is growing but.
Comcast and charter and I think Cox customers get that for free now and so.
Maybe Brian talk about where the video ecosystem is growing and how the company shifts the way you make money, there and Jeff remind us what <unk>.
Access is in E&P paying subs and they use over time, and how you sort of balance that that media.
<unk> business model overall is that fair.
Very fair I think let me just start and I'll, let my colleagues join in.
The way, we're trying to manage the company and we said this several years ago, which was a shift.
It was we saw a change coming.
And we tried to.
Think like a customer and think like the consumer now we've learned I've at least think I've tried to learn from others successes with that mentality.
And the.
Consumers many consumers didn't want the big video package and so what did we can fight that or we can try to embrace it.
And so our leadership in broadband.
Was the first evidence of okay, let's try to embrace it let's put Netflix on X one going back several years and more people I think in a Comcast market view Netflix via X one than any other device I think that's still a relatively true Dave you can comment on that our voice remote.
Integrated all of Netflix there's content then along came many others, let's just jump to Apple. Most recently I think we have the best integration in the world of Apple TV plus on our consumer devices.
Over on the content side at NBC Universal.
That create that change allowed us to create content for Netflix or Amazon or Apple and many others, we own a third of Hulu. So when we bought the company all of our content was committed to Hulu.
In the streaming of met much of our content.
As we've discussed that relationships in change and much of it is now back on Peacock and peacocks only been out there for a couple of years and Super successful and a great quarter and congratulations to all of NBC Universal and the Peacock team.
The results this quarter in my opinion.
And we came up with a different model since we were starting at a different time.
And and add centric.
Our low cost to the consumer so again, it's back thinking from the consumer's perspective, how do we fit in and how do we do so in a profitable long term value, creating way and so the results you're seeing this quarter I mean, if you look at last year last year was our best year in EBITDA.
And our best year in EPS, and 60 years Comcast been in business and we're on pace to do better than this year than last year.
So I I think we have a good model, but it starts with thinking from the customer and so the shift in video we got to a place where we're actually somewhat indifferent.
What the consumer prefers we want a beef where the customer and then if they are now taking our mobile product, they're getting an even better value and if theyre, taking peacock theyre getting and even continued relationship with NBC, if they've changed how they're consuming so I think we're in a very unique.
Playing offense in a very.
Changing world in a way that continues to yield great results for the company.
Yes, So let me jump in Brian and ill take your question on <unk>. So if you kind of go to 30000 feet and look at the NBC Universal business. The business at our core is is producing content and if you look at this quarter alone most successful profitable quarter in the history of the movie business. We think our movie business is second to none right now are <unk>.
TV business has expanded dramatically we sell as Brian said the others. In addition to ourselves our news division second that in our sports Division is doing really great and so if you want it if you have a great content business. The way you maximize your returns is having platforms, where you can have the flexibility to put your content.
On your own platforms and move it around to give you a content the best chance of that.
Of success and we've had that over the years. So when you look at Peacock what is the definition of success. It's really two things one is taking that ecosystem that I just talked about and giving yourself. In addition to your platform, which allows you more flexibility to maximize the return of your content you know.
Both in terms of allowing it to show to have a better chance of being a hit or a movie to have a better return when you can move it around.
And have the right platform for the right piece of content. So we want to get peak out to a scale, where we're fairly indifferent between content going on linear and content going on peacock and having them. The best platform out there and we think we're well on our way to that the second is just the traditional way you look at any investment which is that.
We're investing a lot of money on Peacock and we view the fact that it's going to get to a level of profitability that will generate a return on that investment that will add value to the shareholders and you know this.
This quarter makes us more confident that we're along that trajectory. So those are really the two measures.
Thanks, Phil Operator, we have time for one last question.
Our next question comes from John Hodulik from UBS. Please go ahead.
Great. Thank you.
One for Dave I look back on the cable side the business Margaret Yeah.
Yeah, certainly emerge as one of the.
The drivers of revenue growth in that segment.
And it sounds like you guys are having some real success across small medium and enterprise markets, maybe just any commentary on sort of penetration levels in those markets that give us a sense of how much runway you have and then commentary on sort of the profitability of that business segment versus the rest of the cable bundle.
Hey, John So look we this as Brian mentioned one of the core growth drivers for US is business services I'm really glad you asked about it because the team is doing an outstanding job. When you look at our performance in business services, we outperformed all competitors and peers.
It just it really is a very yeah. It's.
Interesting.
Long term consistent performance from our group there Bill Stemper and the team really done a terrific job and regenerating.
We are now approaching 10 billion in annual revenue and have a great opportunity to grow you know further so its high margins and you look at the addressable marketplace. We're serving lessons, we have 20 less than 20% share of our addressable marketplace, a $50 billion and our.
Foot print so you break it down SMB.
Yeah, we are along with share and very focused on that but we're also very focused on the corollary to what we talked about earlier residential is our Po and we focus both share and revenue and with Wi Fi enhanced Wi Fi for small business customers wireless backup camera.
<unk>.
Security and now mobile so we have a strong portfolio to go up against the telephone companies with and it's working so very balanced approach towards growth in mid market and enterprise.
It is a key long term growth opportunity and in there it's more sophisticated applications like SD Wan enhanced security and and Ucas. The the you know advanced a unified messaging. So in May <unk> has just been a terrific addition, giving us international.
Our scale and being able to help us with certain applications. So.
No specifics beyond that but it really is a very important part of our business and they're doing a terrific job.
Thanks, Jonathan and thank you everyone for joining us this morning.
Okay.
That concludes our question and answer session and today's conference call. A replay of the call will be available starting at 11 30, a M eastern time today.
<unk> Investor Relations website.
For participating you may all disconnect.
[music].
Yeah.
[music].
Okay.
[music].
Yeah.
Yeah.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yeah.
Okay.
Yes.
Yes.
Yes.
[music].
Okay.
Yeah.
Yeah.
Yes.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Yeah.
Okay.
[music].
Yes.
Hum.
[music].
Okay.
Hum.
[music].
Okay.
Yeah.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yeah.
Yes.
Yes.
[music].
Okay.
Yeah.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
[music].
Yeah.
Yes.
Yeah.
Okay.
Yeah.
Okay.
[music].
Okay.
Yeah.
[music].
Okay.
[music].
Yeah.
Okay.
[music].