Comcast reported its quarterly earnings and new subscriber numbers for Q3, and although the results were good, share prices still dropped on the news. Investors are worried that despite robust subscriber growth for the company, AT&T's newly announced $35 DirecTV Now programming bundle will ultimately siphon away cable viewers from Comcast.
Comcast's round of good news for investors included earnings per share of 92 cents, which beat estimates by a penny. Revenue for the company rose 14 percent, to $21.3 billion, as net income attributable to shareholders increased by 12 percent, to $2.24 billion.
The results were in large part due to a healthy increase in customers, with Comcast adding a huge 330,000 broadband customers as well as 32,000 new video customers. The increase in cable TV subscribers is significant in that it is the first jump in that figure for the company in 10 years. Comcast attributed the increase to its highly touted X1 platform, which includes a sophisticated voice command and search feature directly on its remote, among other features.
Shares Dip
Despite all the good news, the timing of Comcast's earnings report resulted in a 3 percent dip in shares. That's because just the day before, AT&T, which recently announced a proposed merger with Time Warner, also announced it would be unveiling a new 100 channel wireless TV package that would be priced at only $35 per month. Comcast investors were apparently spooked by the potential competition.
"People saw DirecTV Now and how aggressively priced it is," explained Anthony DiClemente, Nomura media and internet analyst. "Investors worry that these virtual bundles are potentially cannibalistic to the existing cable bundle."
"One weekend dramatically altered the course of Comcast's strategy," added Amy Yong, an analyst at Macquarie. "The focus on streaming and wireless seems to trump operational excellence."
The worry over competition for Comcast from AT&T and other online pay TV packages may in fact be overstated according to the analysts, however. They said Comcast will not only be able to compete with its own upcoming wireless TV product (the company is readying a cellular phone network as well) but that customers for cable TV and wireless pay TV packages are in large part different animals.
No Comment On Merger
Meanwhile, Brian Roberts, CEO of Comcast, would not comment on the potential merger between two of the company's biggest rivals. When Steve Burke, head of NBCUniversal (which is owned by Comcast) was asked about the plummeting ratings for NFL football this year, he noted that streaming was not the culprit, with just 1 percent of viewers now watching games via live stream. Nielsen just announced a plan to measure TV viewership in bars, airports and other out-of-home locations via portable people meters, which is expected to help ratings for sports events such as NFL games, which are often viewed on the go.
