Monday, December 14, 2015

Comcast Corp. (CMCSA) comments [CFO Mike Cavanagh) from 43rd UBS Conference (12/07/2015)

43rd Annual Global Media and Communications Conference
Comcast Corp. (CMCSA)
Speaker: CFO Mike Cavanagh
Tuesday: 12/07/2015

  • Goals for 2016? Execution. Excited about cable first and delivering on customer experience. Working on getting things right the first time. Ultimately shifting to net promoter side and the improvement in churn. Want to drive market share in cable – on track for double digit growth in broadband revenues, nearly 20% on business services in cable. Goal is to grow video subs on a y/y basis, encouraged thus far. Want to grow share on eneterprise, and growing things in wireless space with Wi-Fi. Lastly – X1 platform and driving more high speed data.
  • Networks goal for 2016: more retransmission and affiliate fees, which we think are still under-monetized. Olympics in 2016.
  • Parks: Harry Potter in Hollywood. That franchise had typically driven 2-3 million uplift in annual visitors to those parks, expect same for Cali.
  • Film: About to finish with best year in Universal Studios history with 3 movies breaking $1 billion at box office globally. 2016 wont be as big as 2015.
  • How to get net video sub growth in 2016? The X1 product and technology. For strong user of video, X1 is best out there. “internet Plus” is a skinny bundle, been available for couple of years, now has stabilized base. After promotional periods, about 30% upgrade to higher level of service over time.
  • College campus with 26 universities now.
  • X1 deployment – UBS estimated 30% penetration end of 2015. Ended Q3 at 25% of video base. Crossed 10 million deployed, running 40,000 X1 a day. 30% estimate isn’t that bad. Will push the pace a little faster in 2016. Looking at steep decrease in churn versus rest of population, much bigger penetration of DVRs and multiple devices, higher use of VOD, all driving higher ARPU.
  • Financial benefits of licensing the X1? Less the financials, more speaks of power of cable and our technology. Shouldn’t bake X1 licensing into modelling, its not a big financial mover for us.
  • Stream TV – cable service over IP for high-speed data customers. A thinner video package for $15 a month. Will only roll it out in the existing CMCSA footprint, relies on the Comcast rights for content as a cable service.
  • Worried about it cannibalizing the expanded basic sub-base? Not who we are going after, which is the non-video customer (broadband only). We are watching closely.
  • Competition in cable, versus U-Verse? Early days but it is competitive.
  • Programming costs, saw a drop in second half of 2015, expect for 2016? No, second half of 2015 lower than normal trends. Will revert to higher programming trends in 2016. Part of that is retransmission costs across all networks, higher sports costs.
  • Broadband – can you monetize it effectively with usage based pricing? We are growing high-speed data revenues, has been growth in market share for a while. Still think it is underpenetrated relative to opportunity in aggregate units. We are investing heavily in capacity, speed, in-home Wi-FI, out of home Wi-FI, hotspots, to make broadband highly valuable to customers. Use usage-based to make sure over time we get compensated for the investments made and the marketplace requires us to make. Key data point on usage-based pricing: 10% of client base uses 50% of capacity. So we are experimenting…
  • No plans to roll the pricing model out throughout entire footprint at this point.
  • Wireless w VZ: no news on this. Worth at this point triggering the MVNOs so we can experiment. We are continuing to invest in Wi-Fi as an extention of the value of broadband pipe, which is the still the best and cheapest way to transmit data.
  • Comcast to be a seller of spectrum where there is overlapping stations in a market. On NBC side, we will participate in the auction. On cable side, have not decided to look at spectrum auction, yet.
  • Enterprise: running just shy of $5 billion annualized run rate revenue for small and medium-size businesses. We are about 10% penetrated in medium-sized market. With a great Ethernet product and dedictaed sales force should be >10%. Higher than 10% in small business.
  • Capex – went from 14.5% of sales to about 15% o guidance. How to think about cable capital intensity in 2016? Been invested in X1, broadband, Wi-Fi gateways, business services, network capcity. 15% is a good place to start.
  • NBC core drivers for 2016: retransmission fees for NBC. 5 years ago it was $4 million. It will be $400- $500 million in 2015, probably $800m next year. Affiliate fees are under-monetized relative to power of selling together the NBC channles togethe. Sold as a package.
  • Bought 51% of Japan park, will increase total leverage from 1.9x to 2.1x because consolidation and Japan is higher leveraged

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