For the last few years, quarterly earnings reports from large cable companies have not failed to fan the flames of schadenfreude among disgruntled TV viewers, particularly those who have already turned their backs on the traditional pay-television ecosystem. Cord-cutters, cord-shavers and the increasingly dreaded “cord nevers” watch in delight every three months as the sector’s biggest companies — after years of rate increases and bloated bundles — confess to their investors that they are bleeding pay-TV subscribers as more viewers migrate to streaming video services.
But those gleeful cable-haters who are expecting a continuation of that narrative might be disappointed Wednesday morning when Comcast Corp., the largest U.S. cable operator, reports earnings for its fiscal fourth quarter. Analysts expect the Philadelphia cable and media giant to add between 10,000 and 20,000 pay-TV subscribers in the three-month period ended Dec. 31. That’s a substantial increase from the 6,000 subscribers Comcast added a year ago, and if it hits projections, it would be the second time in a week that the cable-TV industry has seen glimmers of hope amid the cord-cutting doom and gloom. Last Thursday, Time Warner Cable Inc. said it added 54,000 video subscribers in the fourth quarter and 32,000 for the full year, its first annual net increase since 2006. If that weren’t enough, Charter Communications, which is seeking to merge with TWC, is expected to add 30,000 TV subscribers.
“Despite the fact that cord-shaving/cutting clearly exists, we are encouraged by what we’ve heard about ‘big’ cable,” Marci Ryvicker, senior analyst at Wells Fargo, wrote in a research note last week.
While cord-cutting is still very much a sectorwide problem, recent subscriber growth trends show some companies have done a better job than others at slowing the erosion of their video businesses. Comcast has been aggressively working to retain TV subscribers and court new ones with triple-play offers and ramped-up customer service initiatives.
Amy Yong, an analyst with Macquarie Securities, said in a January research note that Comcast has also been aided by the rollout of its X1 operating system, which has been praised in an industry where poor content discovery remains a core hurdle in attracting younger consumers. “X1 is entering its second year with Comcast installing 40,000 boxes per day,” she wrote.
Despite the short-term gain, Comcast is still expected to lose about 115,000 video subscribers for the full year, according to Ryvicker.
Profit-wise, Comcast is in a far better position than many of its peers. Wall Street expects Comcast to deliver fourth-quarter net income of $2.03 billion, compared with $1.93 billion for the same period last year. Earnings per share are expected to rise 10.7 percent to 82 cents, compared with 74 cents last year. Comcast’s revenue is expected to increase 5.8 percent to $18.77 billion, compared with $17.73 billion last year, according to analysts polled by Thomson Reuters.
On the NBCUniversal side of Comcast’s business, the quarter was a mixed bag. TV ratings were flat for NBC, but the Peacock Network was still the most-viewed on broadcast thanks to strong ratings for “Sunday Night Football.” An analysis of Nielsen data from the research firm MoffettNathanson showed NBC averaged 3.2 million prime-time viewers aged 18-49, compared with 2 million viewers on Fox, 2.4 million on CBS and 2.3 million on ABC.
Michael Nathanson, the firm’s senior analyst, said in a media preview last month he expects NBC’s domestic national advertising to increase 5.6 percent to $1.3 billion in the fourth quarter. For NBCUniversal’s cable networks, he expects domestic national advertising to rise 1 percent to $866,000.
Comcast will report financial results Wednesday before markets open. A conference call with Brian L. Roberts, the company’s chief executive, is scheduled for 8:30 a.m. EST.