Despite continually rounding out the bottom of consumer satisfaction ratings reports; despite facing a millennial generation apathetic if not downright opposed to buying cable TV services; and despite a maturing broadband market with limited room for customer growth… Comcast killed it in 2015.
Reporting on the company's earnings call, Comcast Corp. (Nasdaq: CMCSA, CMCSK) announced subscriber increases across the board for the fourth quarter in video, broadband and voice services along with cable revenue of $11.98 million, a growth rate of 5.9% year over year. The full-year numbers were equally impressive. Total customer relationships increased by 666,000, with only video subs falling slightly below end-of-year 2014 figures. Revenue for the year in the cable business jumped 6.2% to $46.88 million.
So how is Comcast beating the odds? Mostly it's stealing back video market share from telecom and satellite competitors. Compare subscriber numbers. Comcast added 89,000 video customers in the fourth quarter while, for example, Verizon Communications Inc. (NYSE: VZ) added only 20,000 in the same period, and AT&T Inc. (NYSE: T) lost 26,000 video subs.
Comcast credits its rising numbers to the improved value of its services. While the company has slowly started to introduce a new skinny bundle under the brand name Stream, 75% of its new customers are signing up for higher-end video packages because, says Comcast, they're worth the money.
The X1 platform delivers an upgraded TV interface with a more intuitive layout, voice control and multiple interactive features. Comcast's video-on-demand catalog continues to grow with 75,000 shows in total and 700 full seasons of different TV series now available. DVR usage is up, presumably because Comcast now offers a cloud DVR feature.
On the broadband side, data subscribers have access to 13.3 million Comcast WiFi hotspots, and the company reports that 77% of broadband customers sign up for subscriptions at speed tiers of 50 Mbit/s or higher. Comcast has also committed to rolling out gigabit broadband in at least a handful of markets this year.
The changes at the company, however, go far beyond what consumers can see. And this is why -- despite a negative brand image and appalling customer service reports -- Comcast is still raking in gobs of money.
Investments in the company's network over the last several years; an emphasis on experimenting with open source technologies and the implementation of Agile and DevOps workflows; and the push to advance WiFi performance are all examples of under-the-hood improvements that are having a positive impact on Comcast's financials. (See A Peek at What's Behind Comcast's Momentum.)
Comcast is also very good at hedging its bets. While investing heavily in WiFi expansion, Comcast also announced today that it will participate in the upcoming wireless spectrum auction scheduled to begin in March, and it has said it will activate a mobile virtual network operator (MVNO) deal signed with Verizon in 2012. (See Comcast Confirms It Will Activate MVNO Deal.)
Should programming costs become overly burdensome for the cable business, Comcast can rely on its ownership of NBC Universal to balance the scales.
And there is the business services market. Comcast may be fighting itself for continued progress in residential services, but the business services market has a huge runway for growth. Already, Comcast has hit the quarterly run rate for $5 billion in annual revenues by hauling in $1.3 billion in Q4, and more importantly, the growth rate continues to hover at about 20%. (See Moffett: Business Services Critical to Cable Growth.)
Comcast CEO Brian Roberts says he isn't planning any major M&A activity this year that would change the face of the business, commenting: "I really like the company we have right now."
Most consumers wouldn't be so quick to hit the "like" button, but on the other hand, they keep handing over more of their money to Comcast, and boosting the bottom line of the country's largest cable operator.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading