Comcast Earnings Preview: Revenues To Grow Despite Loss In Subscribers

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Comcast (NASDAQ:CMCSA) is scheduled to report its Q3’17 earnings on October 26th. In the first half of 2017, Comcast’s consolidated revenues grew by 9% and operating profit grew by 11.4%. The company’s revenue growth was led by X1 platform bundling, while NBCUniversal’s revenue surge was caused by strong performance in the filmed entertainment division and an increase in traction at the theme park business. Below we outline our expectations for the earnings release.

  • We expect the company to report a loss of 100,000-150,000 subscribers due to competition and complications from Hurricane Harvey. While this loss of subscribers accounts for less than 1% of Comcast’s cable TV viewer base of 22.5 million, it is still significant as the company added close to 149,000 new subscribers in 2016, so this loss could negate the gains from last year. Nevertheless, we expect that this will have a fairly limited impact on Company’s top line in Q3.
  • While cord cutting is likely to weigh on Comcast’s revenues, the double and triple play bundling should continue to largely offset these declines.
  • As the company has rolled out new initiatives such as Xfinity Mobile, which is America’s first wireless service through 16 million WiFi hot-spots, we expect that the company’s high-speed internet revenues will continue to report growth.
  • NBCUniversal’s cable network and broadcasting revenues are likely to improve as the increases in contractual rates will continue to buoy revenues for Q3.
  • Theme park revenues have grown in the first half of 2017 due to increases in guest spending and higher guest attendance. We expect these trends continued in Q3 and will boost revenues during the quarter. However, Comcast has been increasing its investments in this business as it plans to open new attractions each year in the U.S. to boost its share in the growing market. Additionally, it has planned a $3.3 billion investment to build a theme park in Beijing by 2020. These initiatives will likely impact free cash flows negatively in the near term

See our complete analysis for Comcast

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