Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's fourth quarter and full year 2019 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.

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? Good morning, everyone.

Before we get to the results, I'd like to embarrass my friend Jason Armstrong just for a moment and thank you for your incredible hard work these past six years as head of investor relations. And on behalf of everyone at Comcast, and I believe all the investors, say thanks for a great run, and we wish you terrific success in your new role as Group Chief Financial Officer of Sky. Also, I'd like to welcome Marcy Riverker, who's joining to take over Investor Relations. Marcy's got a talented and successful past, and welcome to Comcast. 2019 was a busy, productive, and exciting year for our company, capped off by a strong fourth quarter and And we've already jumped right into 2020 with the debut of our exciting new streaming service, Peacock. As you heard last week, it's a truly differentiated approach to streaming that leverages capabilities from all across our company. As we look to the future, I am confident that the company we have built has all the necessary components to succeed. And our guiding principles remain the same. Be leaders in our markets. continuously improve our products and experiences, and build deep, highly valuable recurring customer relationships. Our world-class teams are executing and operating at a high level, all of which allows us to invest in our businesses and deliver consistent results. The success of our strategy is demonstrated in our consolidated financial performance. We delivered another year of terrific results with growth in pro forma EBITDA of 5.9%, record free cash flow generation of $13.4 billion, growth in adjusted EPS of 14.7%, the 10th year of double-digit growth in the last 11 years. These results were driven by cable as the team's successful pivot to a connectivity-centric strategy and investment in XFI continue to pay off. Cable delivered broadband net additions of 1.4 million, the best in the last 12 years, finishing off with an exceptional fourth quarter, which included 442,000 net additions, a 26% increase over the prior year. In addition, we continue to reap the benefits from our ongoing investments to improve the customer experience, setting all-time best for many key metrics, including agent contact rate, and first call resolution. We're increasing customer satisfaction and driving unnecessary costs out of the business. All in, this drove 1.1 million net customer relationship additions in 2019, our best year on record, as well as outstanding EBITDA growth of 7.3% and net cash flow growth of 18% for the full year. Thank you, Dave Watson and your incredible team. You're doing a phenomenal job. At NBC, our content continues to resonate with consumers. We were the most watched media company in the U.S. in 2019. NBC ended the 52-week season at number one in the key demo for the sixth consecutive year, and Telemundo was number one for the third straight year in weekday prime. Our film business grew EBITDA by double digits to $833 million, making it the third most profitable year in Universal's history, providing further evidence that our strategic slate approach is working. At theme parks, we had a challenging fourth quarter, but overall it was a solid year during a particularly competitive period, and we are looking forward to new attractions and parks to drive growth in the coming years. In its first full year as part of Comcast, despite difficult European market conditions, Sky had a good year under Jeremy Derrick and his team, delivering healthy customer additions and 12% EBITDA growth on a constant currency basis. Our exclusive sports and award-winning original content are resonating with our customers in Europe, with viewership up year over year. Sky has been a great addition to Comcast and positions us to better compete in a world where global scale matters. As I mentioned at the outset, we have all the pieces in place for long-term success. True to our guiding principles in 2020, we are leaning into investments that further improve our products and experiences across the company. First, we'll continue to strengthen our already leading position in broadband. At cable, we are launching our fastest gateway, delivering true multi-gig speeds with unprecedented Wi-Fi range. And we're providing our customers with added protection by offering new features like XFi advanced security for free. At Sky, we are building on our success in broadband in the UK and cable's continued success with XFi in the US to launch broadband in Italy this year. Second, we will focus on the emerging growth areas of streaming and content aggregation by launching Peacock, and accelerating our deployment of Flex and SkyQ. Consumers are watching more and more video driven by growth in streaming. And as we highlighted last week, we believe that Peacock, a premium ad-supported service, hits the mark for both consumers and advertisers. In this app-driven world, consumers increasingly are overwhelmed by content fragmentation and endless scrolling. So with X1 and SkyQ, we enable our customers to aggregate all their apps and linear channels on their TV and seamlessly search access and view all their content. At Cable, we leveraged X1 to launch our newest service, Flex, to better serve the segment of our broadband customers that prefer streaming only. Our early results with Flex show that our customers love it. In our first month, we could not keep enough inventory in stock and we're deploying FLEX as fast as we can. Based on the proven success we had with X1 in the United States, at Sky, we're now accelerating the deployment of SkyQ, getting to X1-like penetration levels as quickly as possible. This is good for our customers and generates very attractive financial returns. Finally, we have some exciting new investments in our park business. This year we will open Super Nintendo World in Japan with launches in the U.S. to follow in the coming years. Super Nintendo World combines one-of-a-kind ride technology with iconic IP for a remarkable guest experience and we believe it has the potential to drive substantial incremental attendance at Universal Studios Japan. On top of that, We are also investing for long-term growth with two amazing brand-new parks. We'll open Beijing in 2021, the largest park we have ever built, and have started construction on Universal's Epic Universe, a new world-class park in Orlando opening in 2023. The park's business is set up for growth for years to come. The scale, capabilities, and talent across our company enable us to successfully execute our long-term growth strategy while also strengthening our balance sheet and returning capital to shareholders. Earlier this morning, we announced that we are raising our dividend by 8 cents for 2020, up 10% over the prior year, and our 12th consecutive annual increase. Before I hand the call over to Mike, I want to take a moment to personally recognize Steve Burke, whose contributions have been instrumental in shaping not only my career, but the company that we are today. It's impossible for me to overstate what a terrific partner Steve has been. His leadership, first at Comcast Cable and later at NBC Universal, have been a critical component of our company's growth and success. And maybe even more significantly, his impact on our culture, and personal integrity have been truly defining. Steve has built a great team at NBCUniversal, led by Jeff Schell, and I know we are in good hands going forward. Thank you, Steve. Mike, over to you.