Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's fourth quarter and full year 2020 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, Ms. Marci Reibacher. Please go ahead, Ms. Reibacher.

Thank you, Operator, and welcome, everyone. Joining me on this morning's call are Brian Roberts, Mike Kavanaugh, Dave Watson, Jeff Schell, and Jeremy Derrick. Brian and Mike will make formal remarks, and Dave, Jeff, and Jeremy will also be available for Q&A. Let me now refer you to slide 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, during this call, we will refer to certain non-GAAP financial measures. Please see our 8K and trending schedules for the reconciliations of these non-GAAP financial measures to GAAP. With that, let me turn the call over to Brian Roberts for his comments. Brian?

Thanks, Marcy, and good morning, everyone. I'm really proud of our fourth quarter results and look forward to giving you a glimpse of what we're focused on and excited about once we come out of this pandemic. Our most recent performance was highlighted by Cable, which grew EBITDA by over 12% and net cash flow by 26%. These are the best results of the year and of any fourth quarter in over a decade. We also have good news to share on our parks segment, which reached break-even, excluding Beijing, even with Hollywood being closed. Our premium ad-supported streaming service, Peacock, now has 33 million sign-ups within just six months of its nationwide launch. And encouragingly, Sky's customer and revenue base essentially returned to pre-COVID levels this past quarter. Clearly, our company is strong, a testament to the tough decisions made by our leadership team and the excellent execution and coordination by our dedicated employees. Looking back over the whole year, 2020 was one of the most uncertain and challenging periods that any of us can remember. But we rose to the occasion ensuring the safety and protection of our employees, providing customers with unparalleled service and innovative products that they relied on more than ever, strengthening our investment-grade balance sheet, and continuing to invest for long-term growth and success. This year's cable results were nothing short of exceptional, hitting a number of company records. We generated 2 million net broadband additions for the year, and $538,000 for the fourth quarter, reaching record low churn. High-speed Internet drove our highest-ever full-year net customer relationship additions of $1.6 million, bringing us to 33 million total customer relationships. Yet with just only 50% penetration of our footprint, there remains plenty of opportunity for future growth. We also delivered outstanding EBITDA growth of nearly 9%, and cash flow growth of 16% for all of 2020. Broadband is the cornerstone of what we do, powered by our robust, flexible, and reliable network. And the many years of investments we've made have been on full display. We've continued to enhance our market-leading competitive position while keeping people connected, protected, informed, and entertained by proactively managing our network, increasing broadband speeds, expanding our Internet Essentials program for low-income households, providing payment plans for customers struggling the most, and offering Peacock and Flex for free. This pandemic has forced us to rethink the way we operate and service our customers. Immediately, we moved all of our care reps to work remotely from home, which has gone so well that we're leaning towards embracing this model permanently. In addition, we promoted further adoption of our digital self-help tools, such as Xfinity Assistant, which are available 24-7. We also expanded our self-installation eligibility, and now over two-thirds of our customers are connecting to our services this way. We are working hard with our communications and marketing efforts to enhance awareness of all we have to offer, which enables us to take costs out of the business while delivering a better experience for our customers. In fact, in the past 12 months, we've reduced agent-handled calls by over 16 million and truck bowls by 1.6 million, all while adding the more than 1.5 million net new customer relationships. Our efforts to reduce costs have been extremely successful, but what's even more exciting are the investments we're making to grow the overall business. A great example is Flex, which is offered to all of our broadband-only customers for free so that they can connect seamlessly to the streaming services they love. Within the first half of this year, Flex, along with X1, will be carrying all of the top streaming apps in the United States. We just added HBO Max, we'll be adding Disney Plus in the near future, and we have many more on the roadmap. Flex has been a major win for us, and we continue to have really high hopes. Xfinity Mobile just came off a strong fourth quarter with nice sequential improvement in customer additions, resulting from a number of significant changes as we fully integrate mobile into our core cable operations and reprioritized our sales channels. We're really excited for 2021 as we've recently expanded parts of our MVNO agreement with Verizon that will enable us to improve our range of offerings and acquire more customers more profitably. As we said from the beginning, an MVNO-led Capital Light wireless model is the right one for us and has even more strategic opportunity in the years ahead. Business services came back faster than we expected. This quarter, we added 26,000 net new customers and generated revenue growth of 4.8%, the highest we've seen since the pandemic began. With less than 20% share of an approximately $50 billion total addressable commercial market in our footprint, we saw plenty of runway. All in all, Cable had a fantastic 2020, and we look forward to a very strong 2021 and beyond. While the global pandemic has had a more significant impact on NBCUniversal, we took advantage of this moment to make a number of changes in both management and operations that sets us up for success. The most notable example is the reorganization of our cable networks and broadcast television businesses, which are now combined along with Peacock in a structure meant to drive long-term cost efficiencies and revenue opportunities. We finished the year having renewed a number of carriage agreements with many of our valuable distribution partners, putting us in a position of strength as we enter 2021. Peacock has had an exceptional start, exceeding all of our internal targets. This premium hybrid AVOD service, which has a light ad load and is unlike any other, offers a breadth of content that appeals to just about every demographic. at an unbeatable consumer value, much of it for free. Momentum has further accelerated with the addition of The Office, which we own and began streaming exclusively on Peacock as of January 1. Not only is The Office driving incremental users, but these viewers are naturally finding and watching other programs on this platform, like Parks and Rec, Yellowstone, our latest original, Saved by the Bell, mega-hit movies from Universal and other studios, and sporting events such as the Premier League, golf, and even an NFL wildcard game. And earlier this week, we announced that Modern Family will be coming to Peacock next month, followed by the WWE in March. In film, our decision to release our titles direct-to-consumer via premium video-on-demand when theaters were forced to close has proven to be profitable and the right move for us. While we look forward to when we can enjoy the theatrical release of many franchise films, such as Fast 9 and The Next Minions and Jurassic World, we will lean into what has become a successful hybrid distribution model. COVID had the most direct impact on our theme parks, which were either closed or running at limited capacity for the bulk of 2020. But I'm pleased with how quickly we were able to reopen Orlando and Osaka, while ensuring the safety of our staff and guests. We continue to provide an amazing entertainment experience. Our guests are responding as confirmed by our steadily increased attendance and our most recent financial results. What we saw this fourth quarter, especially in Orlando, gives us even more conviction in the momentum that our theme parks will experience when we reach a sustainable recovery. We may experience some near-term setbacks with the most recent pickup in COVID cases, but I am optimistic as ever about the long-term trajectory of this very special business. Sky had a strong and encouraging fourth quarter. We added net new customers in every market, bringing our customer base essentially back to pre-COVID levels. The same can be said for revenue, which was essentially flat from what we generated in the fourth quarter of 2019. And we've continued to make meaningful progress on our strategic initiatives. Sky Q, which integrates streaming, has surpassed 60% penetration in the UK and is poised to continue with recent additions of Disney+, Discovery+, and Amazon Prime Video. We're really pleased with the success of Sky Originals, which contributed to the 20% increase in viewership on our Sky Entertainment channels during the fourth quarter and all of 2020, reaffirming our commitment to creating Sky Studios and expanding original programming. While the recent wave of COVID infections and related lockdowns across Europe are once again creating disruption, we're implementing the same protocols and procedures that worked the first time around. We have confidence of a similar pattern as this latest lockdown recedes. We really look forward to the second half of this year when we will also start to see the benefits from the reset of major sports rights contracts and cost savings that should result from a new, cleaner operating model. We're still on plan to double 2020 EBITDA over the next several years, as Jeremy recently laid out. Speaking of Jeremy, I want to thank him for his exceptional leadership of Sky and for his partnership since the acquisition. He and the team have established a unique, world-class brand and a strong, well-run business that's now fully integrated. I'm thrilled for Dana Strong, who has now taken over as CEO of Sky. Many of you on this call have met with Dana since she joined our cable business as head of consumer services back in 2018. She is an accomplished executive with a wonderful ability to transform, inspire, and drive positive change. On top of all that, she also has over 20 years of international experience with nearly half of it spent in Europe. 2021 offers a lot of promise for Comcast and hopefully for the entire world. While the first half will be more challenged than the second due to the most recent strain of COVID, we're really encouraged by the promise of a vaccine, which is the first step in putting the parts of our business that have been most impacted back on a path toward growth. This optimism is shared by our Board of Directors, which this morning announced an increase in our dividend for the 13th consecutive year. I'm also pleased that it is now our expectation that we will return to repurchasing shares in the back half of this year. While 2020 was not what any of us had imagined a year ago at this time, our execution Cooperation and fast decision-making enabled all parts of Comcast, NBC, Universal, and Sky to respond and manage through a difficult environment remarkably well. I'm truly proud of what we have accomplished, and our fourth quarter shows just how well this company is positioned to succeed. Mike, over to you.