Failed to add broadband subscribers

Comcast reported second-quarter revenue and earnings that beat analysts’ estimates, but the cable provider didn’t add broadband customers in a quarter for the first time.

Comcast’s high-speed Internet customers were flat in the quarter, missing the average analyst estimate of 84,000, according to FactSet. The company’s shares fell more than 9% on Thursday morning.

Comcast sees increasing competition for high-speed broadband, its most profitable product. For more than a decade, the cable industry has dominated the home broadband market, but wireless companies like T-Mobile are now competing by offering 5G home Internet products. T-Mobile added 560,000 broadband users in the second quarterwell above its first quarter total of 338,000.

“Mobile replacement will eventually stabilize,” Comcast CEO Brian Roberts said during the company’s earnings conference call. Still, Comcast said broadband losses continued early in the third quarter, noting the loss of about 30,000 broadband customers in July. The back-to-school movement could lead to subscriber renewals before the end of the quarter, Comcast Chief Financial Officer Mike Cavanagh noted.

Here are the basic numbers:

• Earnings per share: $1.01, adjusted against an estimate of 92 cents, according to Refinitiv
• Income: $30.02 billion, versus an estimate of $29.68 billion, according to Refinitiv
• High-speed Internet customers: 0 vs. 84,000 net additions, according to the average estimate among analysts polled by FactSet.

Revenue rose 5.1% to $30.02 billion from a year earlier, helped by NBCUniversal’s theme parks and studios businesses. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 10.1% to $9.8 billion.

In a statement, Roberts called the broadband decline temporary as macroeconomic conditions such as higher inflation limit the number of new connections for the company. Broadband revenue rose 6.8% year over year to $6.1 billion in the quarter due to increased rates and a higher number of home customers than a year earlier.

“We achieved our highest adjusted EBITDA margin in history even against the backdrop of a unique and evolving macroeconomic environment that temporarily pressured our new client volume,” Roberts said.

As of March 2020, Comcast has added more than 3 million broadband customers.

The studios’ revenue rose more than 33% to $3 billion, driven by “Jurassic World: Dominion,” which topped $900 million in global box office sales.

Universal’s theme park business continued to recover from last year’s slowdown due to the Covid pandemic. Revenue jumped about 65% to $1.8 billion. Adjusted EBITDA increased 187% to $632 million, the parks division’s highest-ever second-quarter EBITDA.

Peacock’s paid subscribers remained flat at 13 million after a gain of 4 million last quarter. Comcast said it expects “Jurassic World: Dominion,” along with two movies released in theaters in the third quarter — “Minions: The Rise of Gru” and Jordan Peele’s “Nope” — to help boost Peacock subscribers when come to the streaming service after their box office windows expire. “Sunday Night Soccer” and the World Cup, which begins Nov. 21, should also help boost Peacock’s subscriber totals later this year, Comcast said.

Comcast reiterated that Peacock continues to lose $2.5 billion this year as it spends on new content.

Here’s how Comcast’s divisions fared for the quarter compared to a year earlier:

• Cable Communications contributed $16.6 billion in revenue, up 3.7% year over year
• Media brought in $5.3 billion in revenue, up 3.6%
• Studios contributed $3 billion in revenue, up 33.3%
• Theme parks brought in $1.8 billion in revenue, up 64.8%
• Sky contributed $4.5 billion in revenue, down 13.8%

Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.

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