Comcast Earnings Show Why It's Still the One to Beat
Comcast Earnings Show Why It's Still the One to Beat
(Bloomberg Gadfly) -- Comcast Corp.'s stock surged to a record this week heading into fourth-quarter earnings. Now, it's evident there's still a bit more runway left for the $198 billion cable conglomerate.
On Wednesday, Comcast said video subscriber losses moderated at the end of 2017 and that it was able to sign up 350,000 customers for its broadband service, the unit CEO Brian Roberts says is "increasingly the epicenter" of the business. On top of that, it's attracted 380,000 customers for Xfinity Mobile, the new low-price wireless service that uses Comcast's Wi-Fi hotspots (with Verizon Communications Inc.'s cellular network as a backup).
Traditional cable subscribers will continue to flock to internet-based services, and in fact analysts see Comcast suffering a bigger drop this year than last. However, even in the face of heightened competition from AT&T Inc. and others, Comcast is still well-positioned thanks to its X1 platform that makes it easier to search for shows and movies -- including from Netflix Inc. -- and continual improvements in broadband speeds and coverage.
It has add broadband customers at a much faster clip historically than peers, signing up 1.17 million in the last year. Of course, that, too, will slow in coming years as the market becomes more saturated, but for now it's pulling more than its weight by helping to downplay the weakening video business.
Comcast's wireless service, while marketed solely to current customers of the company's other services, is a shot across the bow to the industry leaders. Proceeds from recent changes to the U.S. tax system will give Comcast more room to pursue a large acquisition in the wireless space without overwhelming its balance sheet, should the government allow.
T-Mobile US Inc. is the obvious wireless takeover choice for Comcast, though Sprint Corp. has tumbled 10 percent this year, making it more vulnerable to such overtures. Sprint Chairman Masayoshi Son, whose SoftBank Group Corp. controls the company, reportedly sought deal discussions with Comcast and Charter Communications Inc. last year. The two cable giants agreed last May to work together on their entry into the mobile market, pledging that neither will do a transaction with a wireless company without the other's involvement for one year. That year is almost up. Charter is also well behind in those expansion efforts and curiously has said little lately as far as where it may fit in with these industry fusions and megamergers. Hmm.
While AT&T heads to court to fight for its Time Warner Inc. acquisition and Charter and Verizon leave their media strategies still somewhat nebulous in the face of declining subscriber bases, Comcast has enough irons in the fire to stay on top this year.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Tara Lachapelle is a Bloomberg Gadfly columnist covering deals, Berkshire Hathaway Inc., media and telecommunications. She previously wrote an M&A column for Bloomberg News.
To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net.
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