Starz, the premium cable network and streaming provider set for separation from Lionsgate’s balance sheet early next year, added 200,000 domestic OTT subscribers from July through September, according to the parent company's fiscal Q2 report. 

Starz finished September with just over 12 million direct-to-consumer streaming subscribers, after losing 430,000 OTT customers in its fiscal first quarter. Starz has around 19.44 million customers across linear premium networks and SVOD platforms, which is about 570,000 less than it had at the end of September 2022.

“We [are] focused on preparing Starz to thrive as a profitable and successful stand-alone company,” Lionsgate CEO Jon Feltheimer told investors. “On the strategic front, we're actively engaged in steps towards highlighting the value of our two separate businesses and expect to update you by the next call.”

Lionsgate beat equity analysts’ expectations in fiscal Q2, with a jump in revenue to from $858 million to more than $1 billion, driven by a nearly 80% revenue increase in the motion picture department.

The Canadian “mini-major” studio also narrowed its net loss for the quarter to $887.9 million. 

Lionsgate’s motion picture business ended the quarter up 77% year-over-year to $396 million, with segment profit up 22% to $68 million. Lionsgate chief financial officer Jimmy Barge credited John Wick 4, as well as an increase in wide and multi-platform releases for the swell.

Lionsgate’s TV sector, however, saw revenue decline 9% to $393.9 million, which Barge attributed to the Hollywood guild strike interruption of episodic TV delivery. 

Lionsgate also recently acquired Entertainment One from Hasbro for $500 million, a transaction set to close later this year.

Charter Communications reported lower third-quarter earnings but added 61,000 residential broadband subscribers, reversing a loss of 42,000 last quarter.

Broadband is the most profitable business for most cable operators, and slow growth — or outright decline — has been a concern for the industry. 

The third-quarter cable TV cord-cutting trend continued, with Charter losing 211,000 residential Spectrum video customers or 4.2% of its base. Charter’s video customer losses were nearly double last year’s losses. 

Comcast and Verizon Communications have also reported heavier cord-cutting this quarter.

The company added 396,000 mobile lines, up from 244,000 added a year ago.

Charter has been pushing Spectrum One, which offers a package of internet, advanced Wi-Fi and mobile service for $49.99 a month for the first 12 months.

“Charter now delivers the nation’s first converged broadband, Wi-Fi and mobile experience at prices that generate significant savings for consumers,” Charter chairman and CEO Tom Rutledge said. “And as I look at our existing advanced offerings and our future product capabilities, we are well positioned to grow our business at very attractive rates for many years to come.”

Charter previously announced that Rutledge will be stepping down as CEO effective December 1, becoming executive chairman. The new CEO will be chief operating officer Chris Winfrey. 

Net income fell 2.5% to $1.185 billion, or $7.51 a share, from $1.217 billion, or $6.69 a share, a year ago. The company said the decline was caused by higher interest expenses. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 2.4% to $5.4 billion.

Revenue rose 3.1% to $13.6 billion.

The results were below Wall Street expectations.

Revenue from internet customers rose 3.9% to $5.571 billion. Video revenue fell 2.7% to $.379 billion. Revenue from voice fell 4.6% to $391 million.

Advertising sales revenue rose 22.9%. ■

Comcast reported a $4.2 billion third-quarter loss as it took an $8.6 billion write-down at its Sky unit in Europe.

Adjusted net income was up 4.5% to $4.22 billion despite a 1.5% decrease in revenue reflecting the overall slowdown in the media business. The company added 14,000 overall broadband subscribers, an improvement on the second quarter, and its Peacock streaming service continued to lose millions of dollars.

The loss on a per-share basis was $1.05 in the quarter, compared to earnings per share of 86 cents a year ago. Adjusted earnings per share rose 10.3% to 96 cents, beating Wall Street forecasts.

“This was a solid operating quarter for Comcast against significantly lowered expectations at cable,” Wells Fargo Securites media analyst Steven Cahall said. “At NBCU, linear pressure and competitive intensity vs. Peacock remain threats for multiple compression. Comcast’s strong balance sheet creates optionality, so strategic direction will matter a lot.”

Comcast share were up more than 7% Thursday morning.

Also: Economy, Hurricane Have Comcast Looking Ahead To Difficult 4th Quarter

Comcast said the Sky write-down was the result of higher interest rates and reduced estimated future cash flows.

“At Sky, our team continues to prudently manage through a difficult and rapidly changing macroeconomic and geopolitical period in the U.K. and Europe,” said Comcast chairman and CEO Brian Roberts. 

Comcast acquired Sky, paying about $55 billion for a 75% share in the company after outbidding Fox.

Profit at Comcast Cable increased 5.4% to $7.5 billion as revenues rose 2.6% to $16.6 billion. 

Broadband customers grew 1.5% to 32.2 million, compared to a loss of subscribers the previous quarter. Revenues from broadband increased 6.9% to $6.135 billion. The company had 29.8 million residential broadband customers, up 10,000 in the quarter, compared to a 281,000 increase a year ago.

Cord-cutting continued with a loss of 540,000 residential video customers. The company now has 15.973 million residential video customers. Revenue from video fell 2.8% to $5.22 billion.

NBCUniversal profits rose 24.8% to $1.7 billion despite losses at Peacock. 

Peacock lost $614 million in the quarter on revenues of $506 million, compared to a loss of $520 million on revenue of $230 million a year ago. Comcast reiterated that Peacock had 15 million subscribers, a figure NBCUniversal CEO Jeff Shell disclosed earlier this month.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for NBCU’s media business decreased 41.5% to $583 million in the quarter. Media revenues fell 4.3% to $8.6 million in the quarter from the year before, when NBCU aired the Tokyo Olympics. Excluding the $1.8 billion in revenue generated by the Olympics, revenue was up 4.4%, NBCU said. 

Also: Comcast Surpasses 5 Million Xfinity Mobile Lines After Wireless Service's Biggest Quarter Ever

Ad revenue was down 35.1% without the Olympics, though Peacock ad revenues rose. Distribution revenue fell 13.7%. 

Earnings at the company’s theme parks rose 88.6% to $819 million, surpassing pre-COVID levels.

Sky EBITDA dropped 27.9% to $701 million. The earnings reflected the timing of sporting events and corresponding programming amortization, the company said. Sky revenue fell 14.7% to $4.3 billion. 

“This performance is a testament to our consistent strategic focus on innovation and our team’s ability to execute at the highest level in any environment,” Roberts said. “Together, our company is a leader in very large and profitable markets. Despite the challenges that may lie ahead, we are in an enviable strategic and financial position, and our future remains bright.” ■

Netflix’s shocking report that it lost 200,000 subscribers in the first quarter not only sent the company’s shares plunging, but it also cast a shadow on the big media companies following Netflix’s lead by plowing assets into direct-to-consumer streaming businesses.

“Netflix has long set the standard for all traditional media companies that are in the midst of pivoting their business models away from the disrupted linear ecosystem towards streaming,” RBC Capital Markets analyst Kutgun Maral said. “However, softer than expected 1Q22 subscriber and financial results along with a marked change in tone from management over its growth prospects will continue to put into question the longer-term attractiveness — or even viability — of the streaming video business model. We expect investor sentiment on media companies that are looking to grow in streaming to remain volatile — primarily Disney, Paramount and Warner Bros. Discovery.” 

Netflix's stock dropped 27% in after-hours trading Tuesday. Disney was down 5%; Paramount was unchanged and Warner Bros Discovery dipped 4%.

On Wednesday, Netflix shares plummeted 36% to 222.04 in mid-day trading.  Disney was down 4%, Paramount was flat and Warner Bros Discovery dropped 5%.

Also: Netflix Plan for a Tier With Commercials Is a Positive Sign for Ad Tech: Analyst

“If Netflix thinks the near-term upper band for paid streaming subscribers is hitting a wall at 220 million, then any companies with large out-year subscriber and revenue per unit targets should be a bit more nervous today,” MoffettNathanson analyst Michael Nathanson said.

Also: Netflix Drop a Symptom of Slowing Streaming Subscription Market: Kantar

LightShed Partners partner and media & technology analyst Rich Greenfield, who has long heralded the demise of traditional TV, now has doubts about streaming being a money-making business.

Sewing Doubts About Streaming

“Streaming TAM [total available market] is clearly more challenging to achieve as evidenced by both Disney and Netflix reversing their position on advertising within the past three months. It is scary if the only way to reinvigorate growth is offering cheaper products that worsen the consumer experience, essentially making it more like the dying linear TV experience,” Greenfield said in a blog post titled, “Is It Time for #GoodLuckStreaming?”

“With TAM in question, increasing competition from tech giants (Apple and Amazon) who do not care about the short-term profits of SVOD [subscription video-on-demand] and the need to constantly retain users with must-see programming (which is hard to create 365 days a year), it is becoming clear that the profitability of SVOD may not be nearly as compelling as investors hoped and certainly nowhere near as profitable as the legacy businesses that streaming is replacing,” Greenfield said.

The new ceiling on streaming has Greenfield speculating that Disney might be better off selling control of Hulu to Comcast, rather than buying out Comcast’s minority stake, as has been expected.

“Disney needs to focus on what Disney does best, creating family-friendly content that has global appeal with franchises that can be leveraged across its businesses,“ Greenfield said. “Why try to compete in adult dramas/comedies/reality TV etc. if the subscriber ceiling is lower than you anticipated?

“In addition, with $20-plus billion from selling Hulu, Disney could de-lever and invest far more heavily in original programing for Disney Plus,” Greenfield added. “And for Comcast/NBCU buying Hulu, they would immediately take Peacock from an irrelevant service to a major player (albeit it would be quite dilutive to Comcast given the lack of profitability at Hulu).”

Even as its subscriber growth slowed, many on Wall Street were bullish about Netflix going into this crucial quarterly report.

Nathanson, who has had a sell recommendation on Netflix for a while, praised Netflix for building a formidable company on the newfangled streaming technology, but he said that management seemed as shocked as Wall Street was.

“At almost every single impasse they have faced before, the company found a way to safely maneuver before hitting the wall,” Nathanson said of co-CEOs Reed Hastings, Ted Sarandos and company. “However, this time it feels different as the first quarter 2022 earnings release, investor letter and video interview portrayed a company that was more surprised by things and less clear than ever before about the path forward.”

It now looks like the total available market for streaming, instead of being all broadband homes in the world (about 1 billion) is closer to 400 million homes, Nathanson said. Factors including affordability, online payment systems and willingness to pay for premium content limits that total addressable market.  

Netflix’s password-sharing problems — involving some 100 million users — indicates the market, particularly in the U.S., is already close to saturation, he said.

Nearing the Saturation Point?

“Going forward, we are interested to see how consumers — especially those at the newly raised $19.99 monthly premium plan for four simultaneous streams — react to the clamping down on out-of-household usage and a request to pay even more for the service,” Nathanson said.

And after saying its main competition was other forms of entertainment, Netflix management acknowledged that all of the streaming services that have popped up in the past two years are taking a toll on Netflix’s own growth.  

“Going forward, the company plans to grow share of viewing faster while decelerating growth in cash content spend,” Nathanson noted. “We question how easy that would be in a world where everyone wants to take share in the market by spending more on content!”

RBC Capital's Maral also sees the streaming business becoming more difficult from a competitive point of view.

“While more nascent streaming services like Disney Plus, HBO Max, Discovery Plus or Paramount Plus are at much different stages in their growth profiles than Netflix and should not be seeing similar headwinds from high household penetration, the pressures Netflix is seeing from competition should be felt similarly across the board and limit conviction in sub growth for our coverage,” Maral said. “Further, Netflix’s reluctant introduction of a lower-priced ad-supported tier over the next year or two will in turn raise competitive pressures for all other streaming video platforms, impacting not just sub growth or pricing power but also share of ad dollars.”

Wells Fargo analyst Steven Cahall, a Netflix bull who had downgraded the stock to “equal weight” or hold, said this report could change the way Wall Street looks at Netflix and its media competitors.

"Historically, good for Netflix meant bad for traditional Media as subs were defecting," Cahall said. "By 4Q21, bad for Netflix = bad for Media as everyone faced lower streaming returns."

“Now, we think we're back to bad for Netflix equals good for media as the slowing Netflix subs will be perceived as market share gains at peers,” Cahall said. “Netflix's ad strategy is a risk to traditional media, but 35 million U.S. and Canadian subs at about $8/month ad ARPU is only about 5% out of our $67 billion in '23E U.S. media revenue.” ■

Comcast and Charter Communications once again defied the general logic, reporting stronger-than-expected Q2 broadband growth despite signs the segment was headed for an extended period of sluggishness.

That slowdown will have to wait for another day, though, as Comcast reported its strongest second quarter ever in terms of broadband growth, adding 354,000 high-speed internet customers in the period and soundly beating analysts’ consensus estimates of 270,000 additions. 

Charter, which reported its Q2 results on July 30, one day after Comcast, said it added about 400,000 total broadband customers (365,000 residential and 35,000 business) in the period, outpacing consensus estimates of 275,000 total additions by 46%.    

Most analysts had expected the pace of broadband additions to slow down after the industry reported its best growth ever in 2020, fueled by the pandemic and stay-at-home orders for work and school for most Americans. The cable industry added 5.6 million broadband customers in 2020, according to Wells Fargo Securities media analyst Steven Cahall, and most analysts expected that growth to slow to about 2.5 million additions in 2021. 

But while the pace of the slowdown was expected to accelerate after the huge gains in 2020 and many Americans beginning to return to offices and schools, that will have to wait at least a little while longer. Most analysts still expect broadband additions will be lower in 2021 than 2020, but the gap will be narrower. Expectations that 2021 growth will be behind 2019 results are no longer being considered, at least for Comcast, according to MoffettNathanson principal and senior analyst Craig Moffett.  

Keeping Up the Pace

“Growth remains torrid,” Moffett said of Comcast. “Broadband is doing better than even we had expected — full-year 2021 is now expected to be much better than full-year 2019, something that seemed aspirational, at best, at the start of the year — and wireless is gaining some serious momentum. With rising margins and still-low capital intensity, the cash generation of the business is nothing short of incredible.”

Comcast’s broadband growth helped drive even better increases in revenue and cash flow for its cable unit. Revenue at Comcast Cable rose 11% to $16 billion (ahead of analysts’ consensus estimates of $15.7 billion) and cash flow rose 14.5% to $7.1 billion, beating consensus predictions of $6.8 billion. Even video customer losses, at 399,000 in the quarter, beat expectations of a 430,000 customer loss. Comcast also added about 280,000 wireless customers, ending the period with about 3.4 million Xfinity Mobile subscribers.

Moffett wondered aloud how the results, and the huge amount of cash Comcast is expected to generate, will be used. In the past, the analyst said Comcast could spend as much as $20 billion on buybacks by 2023. Comcast has $9.5 billion remaining on its repurchase authorization, but didn’t say how much of that it intends to spend this year. Moffett opined that they could use the money to acquire scale. 

“What they do about that issue is anyone’s guess,” Moffett wrote. While the cable segment is doing well and buybacks would probably be the best use of cash, he added, “the debate is about Peacock and whether Comcast needs to (or will) buy ViacomCBS (God forbid) or a not-yet formed Discovery-WarnerMedia.”

Comcast chairman and CEO Brian Roberts tried to squash the M&A speculation on a conference call with analysts, but left the door open to international partnerships. Reports have said Roberts met informally with ViacomCBS chair Shari Redstone and CEO Bob Bakish to discuss streaming partnerships outside of the U.S. 

“We have a majority broadband-centric company and we like the mix,” Roberts said, adding that a partnership that could enhance its international streaming position would be “something you might talk to others and consider.” 

But as far as making another big acquisition to gain scale, he added, “We have all the parts.”  

Charter’s performance in the period comes after Bernstein analyst Peter Supino downgraded the stock to “market perform” in July, partly because of an expected slowdown in broadband growth. While most analysts see broadband customer gains waning in the next few years, the intensity of that deceleration may not be as dramatic as first expected. 

Supino ticked up his estimates slightly for Comcast. He now thinks Comcast will add 375,000 broadband customers in Q3 (from previous estimates of 350,000 additions) and hit 1.6 million additions for the full year, up from his previous mark of 1.4 million adds. That’s in line with Comcast raising its year-end estimate for mid-teens percentage broadband additions, from the previous prediction of a mid-single digit increase. 

Charter did not change its full-year guidance, expecting broadband additions to be at or above the pace they were in 2019.

The additional growth spurred increased optimism from some analysts.

“A solid beat by Charter, and after Comcast’s bullish internet outlook yesterday (July 29) we expect optimism around lower churn and stronger net additions in broadband,” Cahall wrote in a note to clients.

Ample Runway for Charter

Charter chairman and CEO Tom Rutledge said on a conference call to discuss Q2 results that he sees ample runway ahead for high-speed data services, adding that as the population rises and housing demand increases, so will adoption of broadband services. 

“The big issue in general adoption is more of a digital literacy issue than it is a cost issue,” Rutledge said. “And it’s continuing to improve in terms of market adoption because of the way people can use the tools on the internet today, at any level and at any age. And so I think you have a continuous march of broadband adoption right up to occupied housing over the next five years.”

About 100,000 of Charter’s broadband additions came as a result of federal and state Emergency Broadband Benefit (EBB) subsidiary programs, and could churn off in the future. Lower-than-expected non-pay churn also added to the growth.   

Barclays Research media analyst Kannan Venkateshwar saw some potential hidden meaning in Charter’s decision to keep guidance as is, adding it could be normal conservatism, or driven by the company’s assessment of the quality of the pool of available subscribers and management’s view that churn could return to normal levels. “However, visibility around these trends seems to be limited based on call commentary, which means that the unwind of some of these tailwinds could be a surprise, not just for Charter but for the industry as a whole,” he said. 

For Altice, a Less Rosy Picture 

Whatever the reason, Charter and Comcast’s results were in sharp contrast to Altice USA, which kicked off the earnings season July 28 by showing a decline (12,000 customers) in broadband subscribers. 

Altice USA has the highest broadband penetration in the industry at 48.4% and faces the stiffest competition from telcos (Verizon Fios) in its footprint. Thus it could serve as a canary in the coal mine for the rest of the industry.

Altice USA’s recent acquisition of a regional fiber-optic broadband service provider helped offset organic customer losses in the second quarter, as revenue rose 1.7% to $2.52 billion and cash flow growth was flat at $1.1 billion in Q2. 

Altice said unique customer relationships were down by 12,000 in the period, but showed a gain of 23,000 unique customers with 35,000 subscribers  from its most recent acquisition, Morris Broadband, included. Altice USA purchased Morris in April in a deal that valued the North Carolina company at $310 million. 

Organic broadband subscriber growth was flat in the period, but increased to a gain of 30,000 customers with Morris Broadband data included. That compares to a gain of 70,000 broadband subscribers in the prior year. 

The same holds true for video customer losses, down 48,000 organically in Q2, or 36,000 when Morris Broadband’s 12,000 video customers are considered. Altice USA lost 35,000 video subscribers in Q2 2020.

Residential revenue growth of 1.5% was spurred by a 7.8% rise in broadband sales and a 36.4% spike in news & advertising revenue, supported by a strong recovery in local, regional and national advertising plus additional political advertising revenue from the New York mayoral and New Jersey gubernatorial races.

Altice USA CEO Dexter Goei said he expects broadband subscriber growth to improve next year — a departure from Q1 guidance that edge-outs would help spur growth in the second half of 2021. On the call, he said that most of the edge-out build activity occurs in the summer months, which would push out the impact of those extensions into 2022. “[W]e’ve signaled going into this year that [in] 2022 and onward we expect to see much more elevated levels of broadband net adds,” he said.

Supino, along with other analysts, reduced his 2021 broadband growth expectations for Altice USA as a result.

“Investors need some volume growth to be comfortable with the narrative,” Supino wrote. “Zero broadband net adds does nothing to help their case.” 

With more people streaming because of shelter-at-home orders meant to slow the spread of the new coronavirus, ViacomCBS said it was accelerating its plans for an expanded subscription video on demand service built on CBS All Access.

The service will be rebranded and relaunched this summer.

“We believe audiences want their entertainment on demand and their news, sports and events live, and our expanded offering will be the service that gives them what they want, how they want it all in one place and then a great value," ViacomCBS CEO Bob Bakish said during the company’s earnings call with analysts on Thursday.

RELATED: ViacomCBS Expands YouTube TV Carriage

Bakish said the expanded service starts with what on CBS All Access now, including CBS network programming, library content and an expanding slate of originals. In addition, it will have content from Viacom cable channels including Nickelodeon, Comedy Central, MTV, BET and Paramount Network, plus material from the Smithsonian channel.

It will also have more than 100 Paramount films, beginning this week.

Bakish said the streaming platform’s originals strategy is designed to take advantage of its intellectual properties through a growing cadence of tentpole series.

“Our experience makes clear that we can acquire new customers in a disciplined and economically efficient way while reducing churn and driving customer retention with a deep volume of entertainment news and sports,” he said.

Bakish said the distribution strategy for the streaming platform will include working with existing partnerships. He noted that CBS All Access is already distributed by Comcast, AT&T, Verizon Communications and Roku with more to come.

ViacomCBS will also be able to use its network as promotional platforms to draw people to the streaming service.

Bakish added that the promotions platform included PlutoTV, which will have clickthroughs designed to upsell viewers from the free Pluto service to the paid product.

RELATED: Pluto TV Expands to Latin America

He said ViacomCBS will also be launching a broad pay streaming product in multiple markets over the next 12 months.

“We are full speed ahead on streaming seeing strong demand for our services today with a strategy to achieve accelerated growth domestically and internationally in the months and years to come,” he said.

Despite larger than expected losses on the video side, which helped trigger a minor sell-off in its stock on Thursday morning (Oct. 26), Charter Communications chairman and CEO Tom Rutledge stressed to analysts that the cable operator still has substantial room for growth.

Charter lost 104,000 video customers in the third quarter, more than twice the 47,000 it shed in the same period last year. The decline was in part responsible for a dip in Charter’s stock price early Thursday. The MSO has been one of the best performing stocks in the sector since it began its pursuit of Time Warner Cable in 2015, culminating in a purchase that transformed Charter into the second-largest cable operator in the country behind Comcast with about 16.5 million residential video customers.

Partly because of anticipation that it may buy more companies and partly because of the potential to grow subscribers inside its own footprint, Charter has been considered more of a growth stock than some of its larger peers. But some recent glitches around the integration of its Time Warner Cable and Bright House Networks systems over the past several months have cast some doubt on those growth prospects.

RELATED: Rutledge at Cable-Tex Expo extols platform, warns against 'poor service'

On a conference call with analysts Thursday to discuss third quarter results, Rutledge tried to ease any investor fears, stressing that Charter has plenty of mojo left.

“We still have a very rapidly growing good business,” Rutledge said on the call. “Yes, the video business has pressure in it and it has had pressure in it. We still think we can grow the video business going forward and expect to grow the video business going forward. And we expect to sell packaged products going forward including data, mobility, voice and video.”

Rutledge added that the pressures on the video business include pricing, and something he has spoken out against in the past – content providers that allow customers to share passwords for streaming services with non-subscribers.

“Many programmers now are distributors whether they know it or not,” Rutledge added, either through authenticated TV Everywhere platforms or streaming shows direct-to-consumer. But he stressed that allowing consumers to share passwords affects the price-value relationship of video.

“There is an enormous ability for people to receive free content because of the way content distributors are securing their product ineffectively,” Rutledge said. “As a result of that, I think you will see continued pressure on video. But we expect that we can still grow a rich video package inside our product bundles. We’ll think we’ll do that at the expense of our competitors and we think that the general category will continue to decline slightly.”

Rutledge continued that Charter is happy with the way it is pricing and packaging its products, adding that he believes the company has “an excellent growth trajectory based on our pricing structure.”

RELATED: Hurricanes drive Q3 video losses at Comcast

Charter lost about 90,000 video customers in the second quarter, an improvement over the prior year period and better than the 100,000 video customers it lost in Q1 2017. Rutledge has said in the past that he believed the company had turned the corner on subscriber defections as it has ironed out integration wrinkles in former Time Warner Cable systems. Despite what seems like an acceleration of those losses in Q3, Rutledge said he stands behind his words.

“We have turned the corner in terms of our operating strategy which will produce future revenue growth in excess of current revenue growth,” Rutledge said. “The way we know we turned the corner is we have more sales than we had year over year and we have less disconnects. That translates ultimately into more customers, higher quality customers, too, through time that produce revenue and produce net gains as well. Given the way we budgeted this business and the way we operate this business, it's almost exactly on the screws as to where we thought would be.”

As the market for video shifts, broadband is becoming the “epicenter” of Comcast’s residential business, Brian Roberts, Comcast’s chairman and CEO, said Thursday on the company’s Q3 earnings call.

“Our broadband business is increasingly the epicenter of our relationship with customers, and ultimately where we derive the majority of our profitability,” Roberts said.

“We see lots of opportunity in our data connectivity businesses,” Roberts said, noting that Comcast’s residential and business data groups generate about $20 billion in revenue per year, are growing at about 10%, and remain accretive to the company’s margins.

Still, Comcast, which lost 125,000 pay TV subs in the period, remains committed to video, Roberts stressed. “We’re well equipped to compete.”

RELATED: Hurricanes Drive Q3 Video Losses at Comcast

“We saw this evolution coming and think we have invested in the pieces that will ultimately define long-term, profitable success,” he said, adding later that improvements to the customer experience have helped to reduce customer calls handled by agents by 4 million in Q3 alone.

Regarding video, the competitive effect of OTT competition “appears broad-based across our footprint and has moderately accelerated as some additional new OTT players have recently launched,” Michael Cavanagh, Comcast’s senior EVP and CFO, said.

Comcast will continue to battle that trend with product bundles used in tandem with X1, which is now taken by 57% of Comcast’s residential video base, up from 45% a year earlier. It will also continue to take a surgical approach to the market with Xfinity Instant TV, a streaming service that’s currently being offered with broadband within Comcast's cable service footprint. 

Dave Watson, president and CEO of Comcast Cable, said the company still likes its position with video, holding that the capabilities of X1 make Comcast “a different video competitor.”

As for Xfinity Instant TV, a slimmed-down bundle for “broadband-first” customers launched in beta form last month, Watson said it provides Comcast with a “unique opportunity” to target that segment.

RELATED: Comcast Rolls Out ‘Xfinity Instant TV’ Beta

“It’s a good retention opportunity as well,” he said. “It’s way early, but we’re pleased with the out-of-the-gates response to it.”

A business focused more on broadband, despite the competitive effects on the pay TV business, will juice ARPU at Comcast, Craig Moffett, analyst with MoffettNathanson, explained in a research note.

“As Comcast’s video subscriber base declines, their broadband ARPU reflexively accelerates,” Moffett wrote (Comcast’s broadband ARPU is growing 3.7% year-on-year).

Moffett added that this doesn’t necessarily come from price increases, but rather through “the simple unwinding of bundled discounts,” because standalone broadband service costs more than one that is bundled.

New Bundles Emerge

Cavanagh said the “next opportunity” for Comcast to expand its bundled offerings centers on Xfinity Home, its smart home/security product, and Xfinity Mobile, a service for broadband subs launched in May that leans on Comcast’s WiFi network and MVNO deal with Verizon.

Xfinity Mobile has more than 250,000 customer lines, and Xfinity Home has surpassed the 1 million subscriber mark, with 90% of Xfinity Home customers taking three- or four-product bundles.

RELATED: Comcast Goes Wide With Xfinity Mobile

Roberts called Xfinity Mobile’s early results as a “great achievement,” but acknowledged that its represents a sliver of the overall mobile market.

“I like our wireless strategy a lot,” he said. “We’re using wireless to help our very valuable broadband business…When we hit a certain scale, hopefully in the next year or so, we will then be able to be in a position where every sub is profitable on its own merits, and that's the nature of the wholesale relationships that we've made."