Comcast Looking for 'Strategic Value' in Incentive Auction, CEO Roberts Says
Comcast's interest in taking part in the TV incentive auction is more exploratory than with any particular strategy in mind for the bandwidth, CEO Brian Roberts said. In a conference call Wednesday as the company announced Q4 results, Roberts said Comcast's interest is to “see if there's an opportunity to be rewarded with something that has strategic value." The company said in October it would take part in the auction (see 1510270041).
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“It’s a free auction to get a paddle and see what the values are and see the capacity," Roberts said. "It's not clear what's for sale, but you have to make that decision now, and we're making it.” Chief Financial Officer Michael Cavanagh said the $5 billion in stock repurchases the company announced Wednesday for 2016 won't be reduced if the company buys spectrum at auction. In a note to investors, Wells Fargo analyst Marci Ryvicker said, "We don't think there is any change in strategy when it comes to wireless" because Comcast management was clear it's taking part in the auction depending on price.
Comcast was one of the partners in SpectrumCo, which bought licenses in the 2006 AWS-1 auction, only to sell them to Verizon Wireless in 2012 (see 1208240086). A Comcast official said at the time the company never planned to build out the licenses it bought (see 1201060062).
For the quarter, Comcast revenue was $19.2 billion, up 8.5 percent, with its Cable Communications business -- which includes video and high-speed Internet -- up nearly 6 percent to $12 billion as it added 89,000 video customers, marking its best quarterly video results in eight years, it said. For the year, Comcast said it lost 36,000 video customers, an improvement over the 194,000 lost in 2014. It said it ended last year with 22.35 million video customers. It also said it ended the year with 23.3 million high-speed Internet customers, up nearly 1.4 million from Dec. 31, 2014, and had about 11.5 million voice customers, up 282,000.
Roberts said a major Comcast focus is on its cable operations through faster broadband speeds, more customer segmentation, enhancements to its X1 video platform, and the rollout of its DOCSIS 3.1-based Internet service (see 1602020019). The company didn't elaborate when asked about pricing for its DOCSIS 3.1 offering, though Comcast Cable CEO Neil Smit said the rollout will be widespread "in the next few years."
While programming expenses were up 7.1 percent for the year, Comcast expects the rate of programming expenses growth to accelerate this year to about 10 percent due to a variety of contract renewals, increased retransmission fees and higher sports programming costs, Roberts said. The stock rose 5.95 percent to $57.84 Thursday.
Comcast said its broadcast TV business generated about $2.5 billion revenue, with advertising revenue up 7 percent and content licensing revenue up 35 percent, while its cable networks were up 3.4 percent to $2.4 billion. Big growth drivers in NBCUniversal came from its theme parks business, up nearly 39 percent, and film business, up about 26 percent.
When asked about the prospects of a major acquisition, Roberts said, "There's nothing we feel we have to do. I don't feel the need to change the face of our company." Last year, it abandoned its takeover of Time Warner Cable amid potential FCC and Justice Department opposition.