Comcast chairman and CEO Brian Roberts tried to ease investor fears at the Goldman Sachs Communacopia conference Tuesday, telling an industry audience that despite expected video losses in the soon-to-be closed third quarter, the company is performing well financially and operationally.
Comcast stock took a hit Sept. 7 after executive vice president XFinity Services Matt Strauss said at the Bank of America Merrill Lynch Media, Communications & Entertainment conference in Los Angeles that the nation’s largest cable operator would lose between 100,000 and 150,000 video customers in Q3 as a result of competitive issues and damage from Hurricane Harvey and Hurricane Irma. Strauss had said that despite the subscriber losses, Comcast was expected to meet its financial targets for the period, but that seemed to be lost on investors, who drove the stock down as much as 7% on Sept. 7. Comcast shares closed that day at $38.60 each, down 6.2%.
Comcast stock continued to fall in subsequent trading – it closed at $38.21 on Sept. 8 and $37.83 on Sept. 11. Roberts’ comments seemed to have some initial effect – the stock was up slightly in earlier trading – but was down later in the day, priced at $37.70 each at 2:30 p.m. on Sept. 12.
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Roberts started off his Communacopia presentation by addressing the issue, adding that Comcast was “in great shape,” and should end the third quarter with positive RGU growth as broadband subscribers continue to rise.
“Our investment in and focus on innovation is really paying off,” Roberts said. “We have the best products in the industry, our management team strong, and we have a good competitive position. We hit a competitive patch this quarter that was compounded by these two storms.”
The loss is particulary harsh as Comcast finished 2016 with positive growth in video (161,000 customers) for the first time in a decade. In the first half of the year, it continued to remain ahead of the curve, adding 41,000 video customers in the first quarter, while losing about 34,000 in Q2. It should also be noted that the third quarter is traditionally the weakest for cable operators, as college students and customers with summer residences disconnect service.
Roberts continued that the success of its X1 platform has become the company’s real asset, but video is the heart and soul of that platform,” he said. Comcast is expected to end the year with more than 1 million broadband additions, the eleventh straight year the company has added 1 million or more high margin high-speed data customers. Its business services unit is performing at a $6 billion revenue run rate and its newest product – XFinity Mobile – is proving popular with customers.
Comcast launched XFinity Mobile in May, as part of its Mobile Virtual Network Operator (MVNO) agreement with Verizon Communications. The product is available to existing XFinity customers and is characterized by its flexible plans – customers can opt for unlimited data, or can subscribe to a By the Gig plan that costs $12 per gigabyte per month.
Roberts said that initially, most users are opting for the By the Gig plan.
“These prices we believe bring real value to the customer,” Roberts said.
