Q1 Broadband Growth Helps Ease Video Slide for Comcast

Broadband additions beat analysts expectations at Comcast in Q1, outpacing higher than expected video customer losses in the first quarter, while its content businesses were hit hard by the ongoing COVID-19 pandemic.

Comcast added 477,000 residential and business broadband customers in the quarter, well ahead of analysts expectations of 363,000 additions, and not including the free service the company began offering families with school children at the onset of the pandemic. The company lost 409,000 residential and business video customers in Q1, nearly four times the 121,000 it lost in the prior year and well ahead of most analyst expectations.

The broadband growth helped stabilize the cable distribution business’ finances -- revenue was up 4.5% to $14.9 billion and OIBDA rose 6.1% to $6.1 billion. But the company said the second quarter could be a much different story.

In a press release, Comcast said it expects the effects of the pandemic “to increase in significance in the second quarter 2020 and to have a material adverse impact on our consolidated results of operations over the near-to-medium term.”

In a research note, Evercore ISI media analyst Vijay Jayant said the results showed the strength of the distribution business.

“Overall, while the full impact of COVID won’t be felt until 2Q, the results show the underlying strength and resiliency of the company’s cable business,” Jayant wrote.

The virus had a bigger impact on Comcast’s NBCUniversal unit, with revenue down 7% to $7.7 billion and EBITDA down 25.3% to $1.7 billion, fueled mainly by declines at its filmed entertainment and theme parks units. Cable networks revenue was down just 0.3% to $2.9 billion, while broadcast revenue increased 8.8% to $2.7 billion.

Consolidated revenue decreased 1% to $26.6 billion and EBITDA fell 4.9% to $8.1 billion.

“Now more than ever the world needs to stay connected, and we’re extremely pleased that our investments in our network continue to pay off as we are handling significant increases in traffic and meeting our customers’ needs,” Comcast chairman and CEO Brian Roberts said in a press release. “While parts of our business have been more impacted by COVID-19 than others, we have continued to innovate. We are distributing our content in new ways,as evidenced by the recent launch of Peacock on X1 and Flex.

“...We have a strong balance sheet, terrific portfolio of assets,and a world-class management team,” he continued. "This is a moment in time; and when it passes, I am very confident that the decisions we are making now will enable us to emerge from this crisis as a healthy, strong company that is well positioned to continue to grow and succeed.”