Why Cord-Cutting Won't Kill Comcast
The defection of Comcast (CMCSK) (CMCSA) cable television subscribers continues. The leading provider closed out its latest quarter with 22.375 million video customers, 8,000 fewer than it had just three months earlier.
This isn't new. Cable television accounts peaked at nearly 27 million in 2007, and it's been largely downhill ever since. Comcast has actually posted sequential declines in video accounts in 29 of the past 32 quarters. Put another way, there have been just three quarters over the past eight years when Comcast has ended a quarter with more cable television subs than it had when the quarter began.
That's rough, but it's not just Comcast. Cable television in general has been fading in popularity, with the four largest publicly traded cable providers losing a combined 751,000 video customers last year. The industry has been talking about "cord-cutters" for the past few years, singling out folks who are giving up costly cable programs. They're latching on to cheaper programming including streaming platforms, or simply going cold turkey. Now there's a new term called "cord-nevers" to denote the millennials who never signed up for cable or satellite TV, and probably never will.
However, if you think that this is the beginning of the end for Comcast, you're wrong. For better or worse, Comcast is just getting started.
Attack of the Killer Broadband
Comcast may still be licking its wounds from its failure to acquire Time Warner Cable (TWC) last month, but it doesn't need your pity. Comcast's latest quarter delivered revenue, earnings, and free cash flow that were all well above the prior year's showing.
Comcast -- the most hated company in America if you go by last year's Consumerist tournament -- has been planning for the day when you kiss it goodbye as your cable TV provider. It has diversified into new revenue streams, with no purchase as important as NBCUniversal. That deal found Comcast as the owner of the content it was peddling to fewer homes since 2007. Comcast once tried to buy Disney (DIS), but the family entertainment giant shot it down. Now with NBCUniversal in its arsenal, Comcast has its own collection of major networks, cable channels, and theme parks.
However, the fastest growing business at Comcast these days is its broadband offering. Comcast remains the country's most popular choice for high-speed Internet, and just as 8,000 net subscribers canceled its cable service during the first three months of the year, Comcast closed out the March quarter with 407,000 more broadband accounts.
There are now 22.369 million high-speed Internet subscribers at Comcast, and last month we finally saw broadband accounts overtake cable television accounts.
That's the rub for cord-cutters and cord-nevers. They want to kiss their cable provider goodbye, but they also need fast and reliable connectivity to lean on streaming video platforms. Comcast is there for that, making sure that it's the one that disrupts itself.
It's not the only market that Comcast is disrupting. Its Web-based phone service continues to grow in popularity, and that's naturally coming at the expense of telecom landline providers. Everywhere you turn, Comcast is there. It's not going away, for better or worse.
Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
