Comcast Focusing on Pricing in Face of Broadband Losses
Comcast -- which saw notable subscriber losses in Q1 in broadband and video -- also may be an early sign of a softening advertising market, analysts said Thursday after the company announced Q1 results. Pointing to what he called an "intensely competitive environment," President Mike Cavanagh said Comcast "was not winning in the marketplace in a way that is commensurate" with the strength of its network and products. He then laid out plans that would address the company's issues.
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Comcast ended Q1 with 29.2 million U.S. residential broadband subscribers, down 500,000 from Q1 2024, and 12 million U.S. video subscribers, down from 13.6 million the same quarter a year earlier. Comcast also had 8.1 million U.S. wireless lines, up from 6.9 million in Q1 2024. Revenue for the quarter, at $30 billion, was essentially flat. Advertising revenue, at $881 million, was down $70 million year over year.
MoffettNathanson's Craig Moffett wrote Thursday that Comcast's ad-supported media assets face "a significant recession risk." Ross Benes, an analyst for eMarketer, wrote on X that Comcast's ad decline "is a sign of things to come," with TV advertising taking a hit "as a self-imposed recession appears more likely." Benes added, "This means those who do still advertise will have the upper hand during upcoming upfront negotiations." It will be "a buyer's market."
Comcast CFO Jason Armstrong said the timing and volume of sports content hurt Q1 advertising results, as did comparisons to political spending in Q1 a year ago. Excluding those, advertising was relatively flat, he said.
"The level of uncertainty in consumer and capital markets has meaningfully increased in the past several months," Cavanagh said. There's no strong evidence of economic challenges this year, but there are increased odds that they "may be approaching."
He also said Comcast is trying to address competition by focusing on pricing transparency and predictability, as well as ease of doing business. He pointed to changes to simplify pricing, including the recently announced price guarantee (see 2504150018).
Moreover, the company increasingly is pushing bundling of broadband with Xfinity Mobile, he said, while a new mobile promotion for broadband customers resulted in the best quarter of new wireless net additions in two years.
Armstrong said the broadband subscriber drop -- including 199,000 lost in Q1 -- came from "a slight uptick" in churn. He said such steps as the price guarantee -- as well as other unspecified plans for the coming months -- should help mitigate churn from the end of promotional offers.
Comcast Connectivity and Platforms CEO Dave Watson said net subscriber additions by wireless competition appear to have stabilized, "but they're still marketing very aggressively."