Comcast eyes streaming gold with new Charter JV

One day after unveiling a national streaming joint venture with Charter, Comcast executives trumpeted the deal Thursday as another cornerstone in their drive to be a major global video player.

Speaking on the company's Q1 2022 earnings call this morning, Comcast officials said the long-anticipated pact with Charter will give them the scale needed to offer streaming video services efficiently and effectively, putting them on the same level as other national streaming platforms from such major rivals as Roku, Amazon and Google. Under the 50/50 joint venture, the two biggest US MSOs will focus on developing and offering Comcast's Flex Streaming Platform, backed by a user interface, integrated voice search, third-party app integrations and branded 4K-capable streaming players and smart TVs sold through national retailers.

"It opens doors to brand new revenue opportunities," said Comcast Chairman & CEO Brian Roberts on Thursday morning's Q1 2022 earnings call. "We now have a truly global platform."

Dave Watson, CEO of Comcast Cable, noted that Comcast already carries 5 million streams a week of streaming video content through its various properties. "I think this scale matters," he said.

Responding to analyst concerns about the viability of the joint venture, Roberts stressed that Charter brings "terrific markets we don't operate in" and noted that Comcast and Charter have already worked together on several successful JVs, particularly on the mobile front. "We've done this work with Charter before," he said. "So, we have a long history" of working together.

Roberts argued that Peacock, NBCU’s streaming service, should stand to gain from the streaming JV with Charter. He said the company plans to integrate Peacock into the new platform, just as it's now integrated into Comcast's X1 and Flex platforms. He said this move should boost Peacock’s subscriber base, drive higher viewer engagement and generate greater monetization for NBCU.

A bit surprisingly, though, analysts did not ask many questions about the agreement forged with Charter on the earnings call and Comcast officials quickly moved on to other topics as well. In one of the few analyst research notes that took note of the pact this morning, MoffettNathanson downplayed the deal's potential impact on the streaming market, especially in light of what it called "last week's epic Netflix fizzle."

"While not exactly small – Charter’s $900M cash contribution over the next few years is real money – it is still closer to a 'go small and stay home' than it is to a 'go big or go home' initiative," wrote Craig Moffett, a principal at MoffettNathanson. "Its start-up losses are expected to be negligible."

Peacock sees sub growth but big financial losses

Turning to Peacock, Roberts said the streaming service enjoyed an “exceptional” first quarter despite heavy financial losses. He noted that Peacock added 4 million paid subscribers during the quarter, raising its total to more than 13 million paid subscribers and 28 million monthly active accounts, while its hours of engagement increased 25%.

At the same time, Peacock lost a whopping $456 million in adjusted EBITDA on $472 million in total revenue for Q1, compared to an adjusted EBITDA loss of $277 million on $91 million in revenue in the prior-year period. The service did receive a major revenue boost from the Winter Olympics and Super Bowl, as well as the launch of its original series, "Bel Air," and the film "Marry Me."

With Netflix now shedding subscribers by the boatload and the overall streaming business slowing down, Roberts warned analysts that Peacock will not be able to sustain that growth pace over at least the next two quarters. "We do not anticipate seeing this type of growth every quarter," he said.

Jeff Shell, CEO of NBCUniversal, said NBCU is pursuing the right business model with Peacock, running the service as an extension of its TV business with programming and ad sales. He said Peacock shifted its focus to more of an ad-supported model after it saw early success with that approach.

"The noise in the rest of the streaming business really, if anything, just validates what we’re doing," Shell said. "Obviously as things change in the streaming market, we’ll continue to evaluate and shift. But right now we’re really happy with both our business model and how we’re performing."

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— Alan Breznick, Cable/Video Practice Leader, Light Reading

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