Q4 2023 Earnings Summary
- Strong Growth in Peacock Subscribers and Revenue: Peacock ended the year with 31 million paid subscribers, up 10 million over the past year, representing a 50% increase year-over-year, and maintaining a strong ARPU of $10 per subscriber. This growth positions Peacock as a significant player in the streaming market, contributing to revenue momentum and paving the path toward breakeven.
- Expansion of High-Margin Connectivity Businesses: Comcast continues to invest in network enhancements, including the deployment of mid-splits to about 35% of their footprint and launching DOCSIS 4.0 markets to offer multi-gig symmetrical speeds. Despite a competitive environment, they are achieving strong broadband ARPU growth of 3.9%, at the high end of their historical range, and expect to return to subscriber growth over time. , , ,
- Significant Capital Return and Investment in Growth Areas: Comcast reauthorized a $15 billion share repurchase program and since mid-2021 has bought back 15% of their stock. Additionally, they are expanding their footprint by passing 1.1 million new homes and businesses in 2023, with plans to replicate or exceed this level in 2024, indicating confidence in long-term growth opportunities. ,
- Broadband subscriber trends are not expected to improve in the coming quarters due to intense competition, especially from fixed wireless offerings targeting the lower-income segment.
- The potential discontinuation of the Affordable Connectivity Program (ACP) poses a risk to revenue from 1.4 million customers who currently benefit from the program.
- Uncertainty in the advertising market, with macroeconomic factors and less sports programming ahead, could negatively impact media segment revenues.
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Broadband Customer Growth
Q: Can you reaccelerate broadband customer growth?
A: Dave Watson explained that the competitive environment remains intense, especially in the lower-income segment, leading to lower connects despite churn remaining near record lows. Comcast kept its subscriber base relatively flat while growing broadband ARPU by 3.9% for both the quarter and the year. They don't expect subscriber trends to improve over the coming quarters but expect to grow over time. -
Peacock Investment and Breakeven
Q: How much more investment does Peacock need to reach breakeven?
A: Michael Cavanagh noted that Peacock ended the year with 31 million paying subscribers, up 50% year-over-year. Programming investment has leveled off, and they expect improvements in Peacock's bottom line from the peak losses in 2023. The focus is on managing Peacock and linear TV businesses as one, leveraging their content to drive scale. -
CapEx and Epic Theme Park
Q: What's the outlook for CapEx in Parks, especially with Epic?
A: Michael Cavanagh stated that CapEx will remain elevated in 2024 due to the build-out of Epic and two expansion parks. As Epic opens in 2025, capital intensity in Content & Experiences should tick down. Brian Roberts emphasized that Epic is maybe the most exciting project since acquiring NBCUniversal, expecting to open in 2025. -
Share Repurchases and Leverage
Q: Will share repurchases continue at the current pace in 2024?
A: Jason Armstrong indicated they reauthorized $15 billion for share buybacks. Since mid-2021, they've bought back 15% of their stock. With leverage around 2.4x and strong free cash flow, they feel good about continuing strong capital returns. -
Peacock Growth from NFL Game
Q: How did the NFL Wild Card game impact Peacock subscriptions?
A: Michael Cavanagh stated they couldn't be more pleased; it was the biggest livestream event in U.S. history. While not specifying numbers, they expect an increase in paid subs. The focus is on retention and engagement, with record levels of hours viewed following the game. -
Xfinity Mobile and Broadband ARPU
Q: How will Xfinity Mobile plans impact broadband ARPU?
A: David Watson emphasized that wireless is a key long-term growth driver, with over 6 million lines and only 11% penetration of the broadband base. They see opportunities to improve results without being constrained by broadband ARPU considerations, which grew 3.9% for the quarter and the year. -
Impact of ACP Subscribers
Q: What's the impact if the ACP program doesn't continue?
A: David Watson stated they have 1.4 million customers benefiting from the program. Most were customers prior to ACP, and they feel well-positioned to support them even if the program doesn't continue. They view any potential risk as manageable.
Research analysts covering COMCAST.