By Harshita Mary Varghese (Reuters) -Comcast’s mainstay broadband business is likely to face more customer losses to rising competition in the industry, its newly appointed co-CEO warned, taking the shine off a strong quarter that was fueled by growth in its studio and theme park units. The third-quarter results had sent shares up as much […]
Business
Comcast warns of broadband challenges amid rising competition
Audio By Carbonatix
By Harshita Mary Varghese
(Reuters) -Comcast’s mainstay broadband business is likely to face more customer losses to rising competition in the industry, its newly appointed co-CEO warned, taking the shine off a strong quarter that was fueled by growth in its studio and theme park units.
The third-quarter results had sent shares up as much as 4% premarket on Thursday, before the prediction knocked them down 3.7% by late morning.
Comcast expects broadband average revenue per user to decline in the current quarter and stay pressured through early next year, as it shifts customers to consistent pricing plans without a rate hike.
Co-CEO Mike Cavanagh said the competitive broadband environment is not “expected to change anytime soon.”
The company has leaned into simplified pricing, and bundled mobile and internet services, to steady its core network business.
The strategy helped the company record a lower-than-expected loss in broadband customers in the July-September period. It lost 104,000 members, compared with FactSet estimate of 143,200.
Comcast also added 414,000 wireless phone subscribers, its best additions on record.
The company, however, flagged near-term headwinds to core profit from its broadband turnaround strategy, the addition of NBA rights and the Versant spin-off.
“What caught them off-guard was the success of fixed wireless internet where T-Mobile and Verizon have both been aggressive,” said Dave Heger, senior equity analyst at Edward Jones.
HIGH BAR ON M&A
A source told Reuters last week that Comcast was looking into a possible acquisition of Warner Bros Discovery’s assets after the HBO parent put itself up for sale following multiple interests from potential buyers.
Cavanagh said the bar is very high for M&As, but “expect us to look at things trading in our space around our industry.”
WBD’s rich IP library, which holds popular titles such as “Harry Porter” and “Game of Thrones”, could benefit Comcast’s studio and streaming businesses.
Comcast’s parks division posted a nearly 19% jump in third-quarter revenue, aided by its Epic Universe park launch.
Studio revenue rose 6.1% to $3 billion in the quarter following the release of “Jurassic World: Rebirth” in July.
The company’s Peacock streaming business maintained its paid subscriber base of 41 million, despite a price hike in July.
Total revenue came in at $31.20 billion, above estimates of $30.72 billion, according to data compiled by LSEG. Adjusted earnings of $1.12 per share also surpassed expectations.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shinjini Ganguli)