Comcast adds another 80K pay-TV subs in Q4, beats forecast

Comcast Xfinity X1 set top box
Comcast executives attributed the turnaround to their advanced X1 video platform.

Comcast’s sustained its momentum in video services, adding 80,000 pay-TV subscribers in the fourth quarter, beating analysts' forecasts and finishing 2016 with 160,000 net video customer additions.

It was the first time in 10 years that the No. 1 cable operator reported growth in pay-TV services for the full year. Comcast lost 36,000 pay-TV subscribers in 2015.

As they always do, Comcast executives attributed the turnaround to their advanced X1 video platform. Comcast Cable CEO Neil Smit told investors during today’s earnings call that 936,000 new X1 homes were added in the fourth quarter, bringing penetration of the platform up to 48% of Comcast’s footprint. That’s up from 30% at the beginning of 2015. 

Comcast also reported the addition of 1.4 million broadband customers in 2016, its best full-year result in nine years. The MSO added 400,000 broadband subs in the fourth quarter. 

Financials: Cable communications revenue rose 6.6% overall for the company, but it was once again the performance of the conglomerate’s NBCUniversal division that was the star. NBCU revenue was up 11%, with the NBC broadcast network now leading its nearest competitor by a 30% margin in season-to-date viewership, one of the highest margins ever recorded by Nielsen. 

Not only is NBC cooking with new hits like “This Is Us,” but USA Network continues to lead cable networks in viewership. And on the motion picture side, Universal Pictures generated theatrical hits in the fourth quarter, including animated film “Sing,” which is closing in on $430 million at the global box office. 

Overall, Comcast reported a 9.2% uptick in consolidated revenue for the fourth quarter.

Wireless: Comcast CEO Brian Roberts continued to stifle talk about the company’s upcoming wireless product. He said it’s still on target to debut in the first half of this year and that he’ll have more to say when he’s ready. 

Roberts did, however, respond when asked if Comcast’s MVNO deal with Verizon is enough to sustain its wireless ambitions. “We’re hoping that it’s an end-stage strategy and it’s sustainable,” he said. 

Programming costs: Due to a series of new program licensing deals carved out before contracts expired on Jan. 1, Comcast reported a 12.2% uptick in video content licensing costs for the fourth quarter. With that process ongoing—the company just signed a long-term deal with Telemundo, for example—Smit told investors to expect program licensing costs to grow around 13% for 2017. He added that growth should “normalize” into the single digits next year. 

Trump: While peer Randall Stephenson used AT&T’s earnings call Wednesday to express outright giddiness over the prospects of big corporate tax breaks and massive deregulation under the new administration of Donald Trump, Roberts was a little more restrained.

“We’re looking forward to working with new president and new regulatory leaders,” he said. “We’re encouraged. Stay tuned.”

“It isn’t hard to figure out why so many investors have found the cable stocks an attractive place to be postelection,” said Craig Moffett, principal analyst for MoffettNathanson. “All the broad themes of the Trump rally—deregulation infrastructure, tax reform, domestic vs. international—seem almost tailor-made to trigger a cable rally. Comcast shares have jumped over 17% since the election.”

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