Comcast CFO warns of 'a little bit of a slowdown' at BofA Securities forum

Comcast remains the nation’s largest pay-TV provider, but the company essentially ghosted that cord-cutting-bruised line of business in its participation Tuesday at the BofA Securities 2021 Media, Communications & Entertainment Conference.

CFO Mike Cavanagh instead devoted his 44-minute video appearance to the non-withering branches of Comcast’s corporate family tree, from broadband to wireless to theme parks to movies — except those, too, remain subject to a turbulent economic environment.

“Covid has been a big disruption to the business,” he said early on to interviewer Jessica Reif Ehrlich, Bank of America Securities media and cable analyst and managing director, before noting the pandemic’s recent drag on Comcast’s core cable operation in particular.

“What we’re seeing in the most recent past. like the tail-end of August, is a little bit of a slowdown in the net adds in the cable business,” Cavanagh warned. “We’ll trend in line for third-quarter net adds with historical averages for third quarter, but we’ll be behind the third quarter 2019, which was a record.”

He voiced optimism that Comcast subscriber growth will pick up before long: “Sooner or later, we’re going to see Covid get behind and see this quarterly volatility, which is just Covid-driven, go away.”

One line on Comcast’s cable road map involves upgrading the broadband service it provides to existing customers.

“We’re going to deploy more node splits, more fiber in the network,” he said. “We pick up the benefit of a better customer experience, the ability to give our customers better download and upload speeds.”

Those enhancements, in turn, will ease Comcast’s upgrade path to deploying DOCSIS 4.0, “which will give us multi-gig speeds up and down.”

Comcast also plans to keep expanding service, but Cavanagh did not offer specifics beyond saying “we’re not going to miss an opportunity to do new builds in our footprint.”

Nor did he mention any relaxation of Comcast’s 1.2 data cap on residential accounts, a frequent subject of customer hate even before the pandemic increased many people’s bandwidth consumption at home.

Comcast’s linear cable-TV business didn’t come up at all during the discussion. But Cavanagh noted that Flex — the streaming video product it now offers to almost 4 million broadband-only subscribers — was working to keep those customers from cutting the broadband cord after they’d cut the TV cord.

(Nearly 400,000 Comcast TV subscribers canceled video service in the second quarter.)

“Active users there are experiencing 10-15% lower churn than the alternative,” Cavanagh said.

Xfinity Mobile, the company’s resold Verizon Wireless service, also helps keep Comcast internet customers in the fold.

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“When we see attachment of wireless, net promoter scores are higher, churn is lower versus broadband only customers,” Cavanagh said of the 2 million or so subscribers tho have added Xfinity Mobile to their service. “I’d like to see that 2 million much much much higher.”

Turning to the rest of Comcast’s entertainment businesses, Cavanagh pronounced himself cautiously optimistic about NBCUniversal’s theme parks.

“Domestic demand is strong,” he said. “We want international travel to return.”

Ehrlich asked him what sort of make-goods Comcast had provided to Tokyo Olympics advertisers to compensate for historically-low ratings for the pandemic-constrained games. Cavanagh’s answer: none.

“With Peacock and other digital platforms, we were able to use that among other tools to satisfy the expectations and the commitments we made to advertisers during the Olympics within the Olympics,” he said.

Cavanagh had a similar answer to Erhlich’s question about Comcast reshuffling release windows for Universal movies to give its Peacock streaming service a four-month exclusive after theatrical debuts: In the end, things added up for the Philadelphia firm.

Said the CFO: “The money we received from third parties for that 18-month window, despite the fact that we’re keeping the first four months of that window, is actually higher than what it had been prior to this new deal that we did.”