Comcast Mulls Spinoff of Cable Networks

Comcast is considering spinning off its cable networks -- though not streamer Peacock or its broadcast assets -- into a separate, publicly traded company, President Mike Cavanagh said Thursday as Comcast announced Q3 financial results. In addition, he noted Comcast is open to streaming partnerships with Paramount Global. The company said that, absent the impact of the end of the affordable connectivity program (ACP), it would have been in the black with broadband net adds.

Comcast lost 96,000 broadband subscribers in Q3 related to the end of ACP, CFO Jason Armstrong said. Subtract out the 9,000 net gain it would have enjoyed otherwise, it lost a total of 87,000 in the quarter, he said. The subscriber increase came in part from typical Q3 gains such as back-to-school activity, plus some from AT&T's strike (see 2409160020), he said. Comcast is on course to have its network pass an additional 1.2 million homes this year as part of its footprint expansion, said Armstrong. Fiber competition has overbuilt 50% of Comcast's network, he added, noting overbuilding will continue, with Comcast expecting overbuilding competition across the majority of its footprint.

Comcast Cable CEO Dave Watson said that while video remains in negative territory, the company's rate of losing subscribers is improving in part due to lower churn. Bundling with mobile has helped moderate churn, Watson said, adding that Comcast's Now streaming service portfolio, such as Now TV and Now Latino, also have helped video numbers. Comcast said it lost 365,000 video subscribers in Q3, vs. losing 490,000 in Q3 2023.

The company anticipates bidding for broadband equity, access and deployment (BEAD) projects as long as states' participation rules "allow for rational private sector investment" and don't impose price controls, said Watson. Comcast continues assessing the impact of hurricanes Milton and Helene, he said. Initially, issues seem "significantly less" than Hurricane Ian, in 2022.

The company was going to have a rough broadband year due to fiber overbuilds and fixed wireless access competition, but ACP's end compounded things, MoffettNathanson's Craig Moffett wrote. He also noted the 87,000 broadband subscriber losses likely marks the bottom for net adds, while the competitive impacts of fixed wireless access and fiber appear "ever so slightly moderating." Moffett called the spinoff prospect "a very welcome development [as investors] have yearned for exactly this, or at least something close to it, for years."

Revenue for the quarter was $32.1 billion, up from $30.1 billion year over year. Residential broadband subscribers numbered 29.5 million, down from 29.8 million year over year. The company has 12.8 million video subscribers, down from 14.5 million. It ended the quarter with 7.5 million wireless lines vs. 6.3 million in Q3 2023.