Surprisingly Successful Peacock to Be Greater Focus: Comcast

With its Peacock streaming service growing faster than expected, Comcast plans to ramp up spending on content for it, executives told analysts during a quarterly call Thursday. CEO Brian Roberts said it will look at ways to expand its broadband footprint more aggressively, with government subsidies and new household and business formation potential growth opportunities.

Even without focusing on growing Peacock's paid subscribership, it ended 2021 with more than 9 million paid subs, said NBCUniversal CEO Jeff Shell. He said when Comcast launched the streaming series two years ago, it anticipated most would gravitate toward the free, ad-supported tier instead of the $5 monthly tier with some ad support or the $10 premium tier. Roberts said by Dec. 31, Peacock had 24.5 million active monthly accounts -- the number it hadn't expected to reach until 2024. Shell said a lot of NBC content premieres on Hulu, and over time Comcast would like to pull that from Hulu and send it to Peacock.

Peacock had revenue of $800 million in 2021 even with a relatively limited programming slate, Comcast Chief Financial Officer Mike Cavanagh said. He said Comcast will double spending on Peacock content in 2022 to $3 billion, reaching $5 billion within a couple years. Some of that would be a reallocation from spending that has been for linear programming, he said.

The cadence of residential broadband subscriber additions "came in differently than we expected," Roberts said. Comcast said it ended the quarter with 29.6 million residential broadband subs, up 1.3 million year over year but a gain of only 194,000 from Q3. Roberts said with Comcast having about 50% broadband subscriber penetration in its footprint, it has a long runway for potential future growth, especially as it looks to expand that footprint. Comcast Cable CEO Dave Watson said broadband adds were slow in Q4 in part because of seasonality and lower moving activity by potential subscribers. The churn, however, is at record lows, he said. Watson said Comcast plans to be price competitive in various customer segments, including those who are "income constrained." Q4 revenue was $30.3 billion, up $2.6 billion year over year.

Comcast ended the year with 4 million mobile lines, up 1.2 million. Cavanagh said the mobile business reached stand-alone profitability for the year, with $157 million in the black. That's before it starts meaningfully offloading mobile traffic onto its citizens radio broadband spectrum, which is likely at least a year away, MoffettNathanson's Craig Moffett wrote investors. The company ended Q4 with 9.1 million residential voice customers, down 500,000.

Comcast has 17.5 million residential video subscribers, down 1.5 million. Cavanagh said the decline was due largely to a residential rate adjustment at the start of 2021, and a similar rate increase this month should mean the cord-cutting trend continues across 2022. He said programming expenses were down due to fewer video customers, and the company should have year-over-year declines in programming expenses this year due to fewer contract renewals and fewer video customers. Roberts said Comcast returned to “normalized levels of production and programming” at NBCU and Sky during Q4.