October 2, 2013
A popular financial analyst ended a note on the cable industry’s efforts to reign in cost and leverage its strengths with a single comparison. “The goal: To be more like Comcast.”
Comcast has been the gold standard for cable operations not just this year, but for the past 10 quarters, consistently outperforming peers in every metric, both financial and operationally. You want revenue growth? Comcast has grown cable revenue an average of 6% per quarter for the past 10 quarters, as its publicly traded peers struggled to eke out an average of 4.7% growth during the period. How about operating cash-flow growth? Comcast has averaged 6.8% OCF growth over the past 10 quarters, while the other publicly traded operators have averaged 1.17% growth.
Operationally, Comcast has led the charge on net high-speed data additions (620,000 so far this year), phone additions (372,000 in 2013) and continues to show improvement on the video subscriber front, stifling the bleeding: It lost about 219,000 video customers in 2013, about the same as its first-half losses in 2012.
Comcast’s superior performance has breathed new life into cable at a time when threats from online competitors are filling up the pages and pixels of the business press. With its performance over these many months, Comcast has shown that cable operators can do more than just compete in the new technological environment — they can flourish. It was Comcast that back in 2011 first gave analysts and investors a whiff of what the future could hold when it improved video customer losses by almost 40% for the full year, shedding about 460,000 video subscribers versus 757,000 in the prior year. Comcast has kept those improvements coming — it has reported reduced video-customer losses in nine of the past 10 quarters.
Cable division president and CEO Neil Smit has his sights set on reversing the decade-long cable-industry trend of annual subscriber losses, stating that the goal is to bring Comcast back into video-subscriber gains in the future. A substantial housing-market gain and an overall improvement in the economy could help, but Comcast is trying to grease the runway. The cable giant has consistently launched new products every quarter — it has the largest on-demand library of any operator and has made huge strides in bringing that content to every device in a consumer’s home, through TV Everywhere, iPad apps and its subscription-based multiscreen VOD service Streampix.
On the technology front, Comcast began rolling out its cloud-based user interface, the X1, in major markets earlier this year and expects to have the IP-based platform available in all of its markets by the end of the year. A new platform — dubbed the X2, which will include a cloud-based DVR — will begin rolling out next year. While the X1 and the X2 have been called “game-changers,” offering an elegant solution for customers to navigate through the growing sea of content online, on-demand and elsewhere, plans to share the technology with other operators on a licensing basis may prove to be truly transformative for the industry.
While only a concept at the moment, Comcast chairman and CEO Brian Roberts said in interviews with Multichannel News earlier in the month that the company could license X1 to other operators, giving the industry a truly ubiquitous, standards- based interface which is easily upgraded and modified via the cloud. Roberts and Smit, the two chief architects of Comcast’s cable strategy, sat down earlier this month with MCN editor-in-chief Mark Robichaux and senior finance editor Mike Farrell at Comcast’s Philadelphia headquarters to discuss just how the operator has managed its consistent performance and what it believes the future holds. Multichannel News
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