In Thursday's Q3 earnings, Comcast posted the best broadband quarterly results in its history by adding more than 633,000 residential and business subscribers. Over the past nine months, Comcast has added more broadband subscribers than it did in all of last year.
To top that off, Comcast's total customer relationship net additions reached 556,000 in the third quarter, which was also a quarterly record.
On Thursday morning's earnings call, Comcast CEO Brian Roberts attributed the success of his company's broadband services to years of investments, along with synergies from its Flex and Peacock services. With Flex, which is a free streaming video service that comes with Xfinity broadband, Comcast has seen a 15% to 20% reduction in its broadband subscriber churn.
Roberts also touted the success of Comcast's Peacock service, which now has close to 22 million subscribers after having 10 million in July. Peacock is included at no additional cost for all Xfinity Flex customers and Xfinity X1 and video customers who have a subscription to Xfinity Internet or Digital Starter TV. It's also offered as a paid option.
"It is clear that Peacock's results are enhanced by the placement and distribution it gets through our broadband service," Roberts said. "And adding Peacock to broadband is resulting in significant improvement in both churn and growth as Peacock is continuously cited as a differentiating factor at the point of sale for Xfinity broadband products."
With both AT&T and Verizon announcing a growing number of broadband subscribers in their recent earnings reports, Comcast was asked during the Q&A of the earnings call where its broadband additions were coming from. David Watson, president and CEO of Comcast Cable, said the increase in the number of broadband subscribers has been building momentum even prior to the Covid-19 pandemic. With a 51% penetration rate for broadband in its footprint, Watson said there's lots of runway for additional broadband growth.
"The good news is it's been relatively consistent, maybe a few new opportunities enter the picture through the Covid period, but it's across the board in terms of where we're taking share on the front end," Watson said. "We're taking share from telco wires participants, DSL, MDU competitors, and mobile providers. So it's kind of across the board in many different segments.
"We look to have a sustained competitive difference by delivering just a better product in the marketplace, better speed, better coverage, better feature capability, and now with streaming. You combine that with Peacock and all of the other apps that come connected by Flex, I think this is a really good long-term competitive formula."
Roberts also said Comcast has "experienced great success" syndicating its X1 platform to cable operators such as Cox Communications and Shaw Communications.
"White labeling our software and technology is a significant revenue stream that boasts healthy margins, and even more important scale for our platform," Roberts said. "We look forward to expanding this expertise to other distributors, and believe that an even larger nationwide and potentially international syndication model will create new opportunities in this rapidly changing ecosystem that will create value for our company and our shareholders."
Comcast's 3Q numbers
Comcast's total revenue for the quarter that ended in September was $25.5 billion, down 4.8%, but ahead of Wall Street's expectations. Adjusted earnings per share came in at $0.65 a share. Net income was $2 billion, or $ 0.44
The cable division's revenues increased 2.9% year-over-year to $15 billion as growth in broadband, wireless and business services offset some of the declines in video revenues.
Comcast's cable networks accounted for $2.7 billion in total revenue, which was down 1.3%. With the closure of its theme parks due to Covid-19, theme park revenue was down 81% in the third quarter while film entertainment decreased by 25%
Advertising revenue increased 12% year-over-year due to strong political advertising, which was 70% over what Comcast generated in the last presidential election four years ago.
"We remain intensely focused on our top-three strategic priorities of expanding and leading with broadband, aggregation, and streaming, all of which are underpinned by strong content creation, distribution and technology," Roberts said on the earnings call." Each business is increasingly complementing, reinforcing and driving value for the others, while enabling us to offer seamless and bundled experiences to all our customers."