CABLE GOOSED
Comcast sinks despite robust results
These days even the cable giants can’t catch a break.
Comcast, the biggest of the lot, added video and broadband subscribers at an extraordinary clip in the third quarter and got a huge ratings boost from the Rio Olympics, but it didn’t stop investors from unloading the stock Wednesday.
Shares fell 3 percent, to $62.56, on worries that nationally distributed online video TV bundles are about to eat the golden goose. The media colossus reported earnings a day after AT&T announced its new DirecTV Now plan, a $35-a-month online package of 100 channels.
“People saw DirecTV Now and how aggressively priced it is,” said Anthony DiClemente, a media and internet analyst at Nomura. “Investors worry that these virtual bundles are potentially cannibalistic to the existing cable bundle.”
Wall Street also was surprised that Comcast’s forward-looking programming expense guidance was a little higher than expected in 2016 and 2017, DiClemente said.
Macquarie analyst Amy Yong added in an investor note: “One weekend dramatically altered the course of Comcast’s strategy. The focus on streaming and wireless seems to trump operational excellence.”
Still, Yong notes that Comcast has a year to fortify its strategy against rival telecom incursions.
Comcast also has its own plan to deliver a wireless product to the market, she said.
Most customers for new cheaper online packages — delivered by phone companies via internet-connected TVs or mobile devices — are expected to come from the 20 million broadband-only homes, DiClemente suggests.
The arrival of DirecTV Now, as well as similar products from Sling, Sony and soon, Hulu, could actually add to the pay-TV industry, which has been losing households at the rate of 1 percent per year.
Comcast had a stellar quarter by any measure, adding 32,000 video customers — its first uptick in 10 years. The company believes its X1 internet-0connected set-topbox kept users paying for TV.
It also added 330,000 broadband customers, its most robust quarterly increase in seven years.
Comcast Chief Executive Brian Roberts declined to comment on the $85 billion proposed mega merger of AT&T and Time Warner.
NBCUniversal boss Steve Burke fielded a question about declining NFL ratings, and noted that just 1 percent of NFL viewership watched the games via streaming.
Revenue jumped 14 percent, to $21.3 billion, while net income attributable to shareholders jumped 12 percent, to $2.24 billion.
Earnings per share were 92 cents, excluding some items, beating Street forecasts by 1 cent.
Separately, the executive in charge of Google Fiber, a nationwide project to build fast internet, is exiting. Craig Barratt will depart the Access division, which includes Google Fiber and operates in eight cities.