Comcast (CMCSA) stock fell over 10% Thursday morning after the company reported a bigger-than-expected drop in broadband customers in the fourth quarter and failed to add more subscribers to its Peacock streaming service.
The company reported a decline of 131,000 broadband users, more than the 100,000 loss Comcast Cable CEO Dave Watson estimated in December. The escalating losses reflect competitive challenges as mobile providers like Verizon (VZ), T-Mobile (TMUS), and AT&T (T) have been able to attract lower-income consumers with more flexible offerings.
Still, the company said it remains committed to its connectivity business and announced strategic changes to “play to [its] strengths” as internet traffic rapidly expands amid the streaming boom.
“Wireless is a meaningful differentiator as our converged offers provide great savings to the consumer,” Comcast president Michael Cavanagh said on the earnings call. “And so you will see us shift our strategy to package mobile with more of our higher-tier broadband products, both for new and many of our existing customers.”
Comcast’s broadband struggles come as the company also reported a decline of 311,000 TV consumers as more consumers cut the cable cord in favor of less expensive streaming services. The company recently announced a new sports and news TV package, which includes Peacock, for a price of $70 a month. To note, that’s less than virtual competitor YouTube TV (GOOGL, GOOG).
On the earnings call, the company continued to stress the importance of Peacock, although it did not add or lose any subscribers in the quarter, with total paying users remaining at 36 million.
Comcast did improve profitability, reporting an adjusted EBITDA loss of $372 million compared to a loss of $825 million in the same period last year. Losses are expected to improve throughout the course of the year, according to management.
And as MoffettNathanson analyst Craig Moffett pointed out, “There was no fall-off in subscribers after the end of Summer Olympics. That’s a win.”
Still, others on Wall Street have remained cautious about the streamer’s bumpy path relative to other streaming giants.
“Peacock is finding out that it’s expensive to compete in the streaming wars and gains are becoming more difficult to come by,” Ross Benes, senior analyst at Emarketer, wrote in reaction to the report. “As cord-cutting continues unabated, the decision to sell off TV networks continues to make sense, but buyer prospects of these assets will be limited.”
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