Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's fourth quarter and full year 2018 earnings conference call. At this time, all participants are in a listen-only mode. Please note that this conference call is being recorded. I will now turn the call over to Senior Vice President, Investor Relations and Finance, Mr. Jason Armstrong. Please go ahead, Mr. Armstrong.

Thank you, Operator, and welcome, everyone. Joining me on this morning's call are Brian Roberts, Mike Cavanaugh, Steve Burke, Dave Watson, and Jeremy Derrick. Brian and Mike will make formal remarks, and Steve, Dave, and Jeremy will also be available for Q&A. As always, let me now refer you to slide number two, which contains our safe harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. In addition, in this call, we will refer to certain non-GAAP financial measures, Please refer to our 8K and trending schedules for the reconciliations of non-GAAP financial measures to GAAP. With that, let me turn the call over to Brian Roberts for his comments. Brian?

Thank you, Jason, and good morning, everyone. 2018 was a successful and pivotal year for Comcast, capped off by an outstanding fourth quarter where we grew pro forma EBITDA by 11%. For the full year, we generated record free cash flow. We are now truly a global company with our acquisition of Sky, and as you'll hear, we had many other significant achievements throughout each of our businesses. This success is based on a few guiding principles. Be leaders in the markets in which we compete, continuously improve everything so we can deliver the best products and experiences, and keep building deep, highly valuable recurring relationships with our customers. This is what allows us to have tremendous consistency and to think and compete for the long term. Throughout this very busy year, one of the things that stands out for me is that the team did not miss a beat, enabling us to deliver exceptional operational and financial results for the fourth quarter and 2018. So let's turn to a few of the highlights as well as some of the growth opportunities we see in the coming years. In cable, we made a very successful transition to a connectivity-centric model, and that drove our fantastic performance in 2018. Strategy is clear. Deliver the best products and experiences while improving our focus on keeping the customer at the center of everything we do. In the fourth quarter, customer relationships increased by 258,000, And EBITDA growth of 7.3% was the best for a fourth quarter in eight years. For the full year, we added 1 million net new customer relationships driven by our 13th consecutive year of over 1 million broadband net ads. Our connectivity businesses, residential broadband and business services, in total grew revenue nearly 10% in 2018. We made progress in transforming the customer experience and taking unnecessary complexity and activity out of the business. Greater than 75% of transactions are now being completed through digital touchpoints. In the past 12 months alone, we have reduced agent handle calls by 15 million and truck rolls by 1.5 million, all while adding a million new customer relationships. Altogether, this resulted in cable EBITDA growth of 6.5%, the best for a full year in seven years, and net cash flow growth of 13%. Our focus on network differentiation and product innovation continued throughout the year. We rolled out gigabit speed availability to nearly all of the 58 million homes and businesses in our footprint and are redefining the in-home broadband experience for our customers with the best speed, coverage, and control, which we call XFi. In video, we are leveraging our X1 platform to be the best aggregator of aggregators, delivering the broadest selection of content. With our integration of YouTube, Netflix, and most recently, Amazon Prime Video in December, X1 is the best platform to consume live, on-demand, and streaming content on TV and on Xfinity Stream. Xfinity Mobile, which has quickly become another important component of our bundled offerings for customers, ended 2018 with 1.2 million subscriber lines. We're very pleased with this performance in mobile so far and the value it adds to the bundle and are on track to achieve our primary objectives, including positive standalone economics. Customer satisfaction is increasing and retention approved across all of our products in 2018 notably including the best broadband retention on record. So our cable team is leading and their big strategic shifts are really paying off. Looking ahead, we hope to build on this positive momentum. We expect connectivity will again be the growth engine of our cable business in 2019 and beyond, with sustainable benefits to our financial results as our mix shifts more towards these margin-accretive businesses. We see lots of runway ahead, and this should help us deliver another year of healthy customer and net cash flow growth in 2019. NBC Universal has had an incredible run with EBITDA growth at a double-digit compound annual rate since our acquisition, and we are well-positioned to succeed for years to come with scale, must-see content, and I believe the premier management team in the media industry. NBCUniversal ended a very good year on a strong note. Fourth quarter EBITDA increased 12%, driven by over 20% growth at our TV businesses. For the full year, TV EBITDA increased by 15%, with growth across all revenue streams reflecting successful execution of our strategy focused on big events and must-see entertainment, news, and sports content. NBC had a notable year, finishing the 52-week broadcast season at number one in total viewers for the first time in 16 years and number one in adults 18 to 49 for the fifth consecutive year in prime. MSNBC was also a real standout, reaching record viewership for the full year and its largest ever lead over CNN. Our theme parks and film businesses were meaningful contributors to NBCUniversal's profitability as well, and Mike will take you through the details for the fourth quarter and full year. Now looking to 2019 and beyond, as our 2018 results demonstrate, there is robust demand for our content across multiple platforms. The popularity of our programming is what gives us a great opportunity to create our own streaming service, as we announced last week, which we plan to launch in 2020. This service will be distinct and compelling offering current and prior seasons library and some original content with a light advertising load all for free to pay TV customers. It's a great value proposition for consumers and provides marketers with unique, targetable digital advertising and high-quality premium programming. It will harness all of the things that make our company so unique. NBCUniversal's premium programming, beloved franchises, and industry-leading advertising sales capabilities, and cable and Sky's broad distribution to 54 million direct customer relationships across the US and Europe, and top-notch IP video capabilities and infrastructure, including the Now TV OTT platform. We believe that we can generate significant value with this service over time by enhancing our content monetization, strengthening the value of pay TV, becoming a leader in targeted digital streaming advertising, and expanding our reach through direct customer relationships. At the same time, our approach to monetizing our content will remain balanced. We will continue to sponsor a broad, varied distribution environment and see this platform as being a valuable addition to this highly effective strategy. In film, We have a terrific slate in 2019, which includes the third installment in DreamWorks' How to Train Your Dragon franchise, the next chapter in Illumination's brilliant Secret Life of Pets, and the return of the Fast and Furious franchise with Hobbs and Shaw. Finally, we have some wonderful attractions opening at our theme parks in 2019 with Jurassic World in Hollywood and a pretty thrilling new Harry Potter coaster in Orlando. In addition, with occupancy above 90%, even as we've more than doubled our on-site hotel rooms at the park over the last five years, we are looking forward to opening phase one of the 2,800-room Endless Summer Resort in Orlando in 2019. We are confident in the long-term growth potential at our parks, with an exciting roadmap as our partnership with Nintendo debuts at Universal Studios Japan in 2020 and we bring a brand new large park to Beijing the next year. Turning to Sky, which we have viewed for years as a truly unique company that combines a direct-to-consumer business similar to Comcast Cable with brands and content ownership economics like we have at NBCUniversal. Sky operates in significantly underpenetrated markets and has terrific long-term growth ahead of it, including the potential to expand into new markets. As our teams have come together, the brand leadership, impressive customer loyalty, premier content, and innovation-driven culture that attracted us to Sky in the first place have become even more apparent. The team at Sky delivered a healthy fourth quarter, its first as part of Comcast. Sky's achievements in 2018 underscore some of the reasons we are so excited about this business. Sky grew its customer base in each of its territories with 735,000 total net additions in 2018, including a record second half of the year, bringing its customer relationships to nearly 24 million. It continued to innovate and scale its best-in-class Sky Q platform and launched a new TV offering in Italy with Sky over digital terrestrial television. Highlighting Sky's proven cross-selling abilities, fiber penetration increased, and mobile customers continued to scale in the UK. Sky's successful original programming strategy drove strong viewing, with Sky Originals representing nine out of the top 10 rated shows on its wholly owned and partner entertainment channels in 2018. Sky enhanced its differentiated sports offering, securing Premier League soccer rights at a lower cost and Serie A in Italy with more exclusive games. And finally, the team is extending Sky's leadership and customer service while continuing to improve operating efficiency with its digital-first initiatives. We are enthusiastic about Sky's organic growth prospects as well as the opportunities created by the combined company in 2019 and beyond. So in summary, this was a really important year for our company. underscored by an excellent fourth quarter. Our consistent track record, which now includes 24 straight years of EBITDA growth and confidence in our outlook for continued strong and profitable growth is what enables us to announce that we are raising our dividend by 10% for 2019. We're really just getting started on this next chapter in our company's history, and we have a lot of excitement about the future. Over to you, Mike.