Tom Paine
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On a morning where the big question was the extent to which Verizon and Charter might be engaged in M&A talks,
Comcast released its earnings for Q4 2016 and the full year.
Revenue grew 9.2% and adjusted EPS grew 9.9% for the quarter, beating expectations. Continuing the reversal of a long-term trend, video customer net additions were 80,000 for the quarter, and for 2017 Comcast had its best video customer results in 10 Years, with 161,000 net additions.
Programming expense rose just a tick over 10% in 2016, but Comcast expects it to rise 13% in 2017 due to the latest round of rights agreements before moderating the following year.
NBCU revenue grew 13.0% in the quarter, as Theme Parks continued gushing growth and profits.
Business Services, which grew by 16.1% for the year, is now at a $5.5 billion annual run rate.
Comcast is increasing its dividend by 15% per share, splitting its stock two-for-one, and expects to repurchase $5 billion of stock this year.
Comcast said penetration of its X1 interface is expected to increase from 48% at year-end to the low 60s over the next year.
Comcast indicated a mid-year launch for its wireless offering (likely in just a few areas to begin with). Chairman & CEO Brian Roberts said he expects "most popular mobile devices" to be available for the service. Roberts also said that after reaching limited scale, Comcast expected each incremental customer to be NPV (Net Present Value) profitable. CFO Mike Cavanagh said to expect a $200 to $300 million drag on operating cash flow from wireless until Comcast starts breaking it out separately. Beyond that, the company was rather tight-lipped about wireless.
There seems to be a developing consensus that wireless and cable assets, in some combination, are the best way to provide 5G LTE. Cable's backhaul capacity, and its indoors networking capabilities ( where cellular is weak on its own) are valuable assets to the wireless industry.
Round Numbers
Charter: Marketcap - $90bn LTD - $35bn
Comcast: Marketcap - $181bn LTD - $49bn
Verizon: Marketcap - $200bn LTD - $104bn
AT&T: Marketcap -$260bn LTD -$113bn
Source: Yahoo Finance as of close 1/26/2017. AT&T as of 1/27 morning.
Comcast beats on earnings and revenue
(CNBC)
Comcast Backs Bet on X1
Plans to expand X1 penetration beyond 60% in 2017, seek more licensing opportunities (Multichannel News)
Comcast Chief Pressed on Wireless Rollout Plan, Regulatory Environment Under Trump (Variety)
Cox thanks white-label X1 for best video performance since 2008 (FierceCable)
Verizon, Charter Talks Heating Up? Malone Vision Key (IBD)
Verizon Exploring Potential Charter Merger (Report) (Variety)
Verizon CEO Said to Approach Maffei About Possible Charter Deal (Bloomberg)
Verizon: Reasons Charter Speculation Makes No Sense, Per Wells (Barron's Tech Trader Daily0
