Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's first quarter 2021 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 Schultz, and Dana Strong. Brian and Mike will make formal remarks, while Dave, Jeff, and Dana will also be available for Q&A. Let me now refer you to slide two, which contains our safe harbor disclaimer and reminds 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 Robert for his comments. Brian?

Thanks, Marcy, and good morning, everyone. We certainly got off to a great start this year. Our entire company performed well, and we once again had particularly strong results at Cable, which posted its third consecutive quarter of double-digit EBITDA growth, ninth consecutive quarter of double-digit net cash flow growth. We added 461,000 broadband customers, which drove 380,000 customer relationship additions. This is the best first quarter on record. Our Connect activity was healthy and broadband churn improved for the 13th quarter in a row, hitting our lowest churn rate in our company's history. I'm very proud of this quarter's results and our long record of growth, which I believe is a direct result of disciplined investment, fantastic innovation, and consistent execution in a highly competitive market. This morning, I'd like to go a bit deeper in two areas, the robustness of our network in the U.S., and more broadly, how we positioned ourselves to successfully compete against alternative providers and technologies. We've spent nearly $30 billion in the last decade building an expansive, fiber-dense network comprised of 191,000 route miles that carries an immense amount of traffic and has demonstrated extraordinary performance throughout the pandemic. Under Tony Werner, our retiring Chief Technology Officer, we have consistently engineered our network to anticipate change. And during his 15-plus years at Comcast, He has helped transform us into a product and technology innovator and leader. Tony, we thank you. He's being succeeded by Charlie Herron. Many of you on this call are familiar with Charlie. He helped develop game-changing products, including Scaling X1, and most recently led the successful effort to redefine how we interact with customers, which has resulted in significantly higher NPS scores and lower operating costs. Charlie, Dave, and I have been fortunate to work together for 20 years. Under Dave and Tony, we've recruited the best engineering talent around the world and now are working as one global tech team to create platforms, apps, and experiences that evolve the way people connect and consume entertainment. We've done all this while keeping the network our number one priority. We've introduced the X-Fi Advanced Gateway. the most powerful of its kind. Our highest users are connecting a wide variety of devices in the home and streaming multiple services simultaneously over Wi-Fi. Our XFi pods integrate with Xfinity gateways to form a mesh network that maximizes Wi-Fi coverage. All you do is plug one of these pods into an outlet to get great coverage in every room. We provide our customers with what they need, which goes well beyond extraordinary connectivity and speed. Xfinity is the only broadband provider to offer advanced security for monitoring devices inside and soon outside of the home. We also uniquely provide our customers with a whole home speed test and enable parents to manage internet time spent by streaming application. This is all backed by a network that is built to consistently deliver the fastest speeds and outperform well into the future with two major initiatives underway. The first is virtualizing our network by leveraging artificial intelligence and machine learning. We're taking functions that were once performed by thousands of large and expensive pieces of hardware and moving them into the cloud, which alone has reduced innovation cycles from years down to just months. We're also automating many of our core network functions so that we can deliver instant capacity as well as identify and fix network issues before they ever affect a customer. Our second priority is further enhancing how we deliver our broadband product over our network. We currently offer downstream speeds of 1.2 gigs across our entire footprint using our DOCSIS 3.1 architecture and can increase upstream in a capital efficient way. We're making great progress to deliver multi-gig symmetrical speeds. And the last six months, we completed two important milestones on our roadmap. In October, we conducted a successful live test of 1.25 gig symmetrical speeds And earlier this month, our engineers completed the first-ever live lab test of DOCSIS 4.0, which establishes a foundation for us to deliver multi-gigabit speeds over our existing network without the need for massive digging and construction projects. Let me next talk about Xfinity Mobile, where we're having great success. This past quarter, we reached break-even on a standalone basis for the first time. and added 278,000 mobile lines, the highest quarterly addition since launch. We just announced a new unlimited family plan, which can provide $600 in annual savings relative to other competitor family plans. Now let's turn to Sky, which despite renewed lockdowns in Europe, generated revenue growth and delivered the best first quarter customer relationships net addition in six years. I am particularly encouraged by our strong performance in the UK. Excluding pubs and clubs, which remain closed, UK direct-to-consumer revenue grew 8% over the first quarter 2020 and 11% relative to 2019. Return continued to trend down. Two-thirds of our customer base in the UK now have SkyQ. We're seeing great acceleration in mobile. And we just launched SkyConnect, our B2B broadband service that leverages the expertise of Comcast Cable. Dana Strong is off to a great start and is syncing up more than ever with Comcast Cable and NBCUniversal so that together we're all innovating more quickly, better serving our customers and viewers, and increasing operating efficiencies. We're also encouraged by the trends we're seeing across NBCU. Our park segment broke even, excluding Beijing, for the second consecutive quarter, driven by remarkable attendance at Universal Orlando. We can see firsthand the pent-up demand for high-quality entertainment and family fun outside of the home, and we remain incredibly bullish on the park's business. While Osaka recently had to close temporarily, Universal Studios Hollywood reopened on April 16th, the first time since the pandemic started. Our long-term excitement stems from the fact that we have a fabulous roadmap of new attractions and experiences awaiting guests as they safely return to our current parks. In NBCUniversal's media segment under Jeff Schell and Mark Lazarus, we're starting to see the benefits of our new operating structure. Including Peacock, adjusted EBITDA increased 10% year over year. Our news content continues to experience tremendous momentum, and distribution revenue is trending above expectations, a testament to the strength of our linear brands. We're back in business on the studio side with more than 30 television series currently in production, and we're excited for our first big theatrical debut with Fast 9, launching in both the U.S. and China later in the second quarter. We're also making great progress with Peacock, our premium ad-supported streaming service. Just one year post-launch, we have 42 million sign-ups. Monthly users of the service are consuming nearly 20% more programming hours each month than our traditional audience on NBC. And we just crossed 1 billion total hours watched, nearly double our plan when we launched. This strength in users and engagement has enabled us to create additional advertising inventory outside of our initial partnership, with CPMs at a material premium, the linear prime time. Key to Peacock's domestic success has been Xfinity, with X1 and Flex driving subscriber acquisitions and healthy engagement. With Peacock, we've created great options for ourselves with several opportunities on the horizon. We've recently secured more original programming with creative partners like WWE and the NFL, providing a strong path to upsell into Peacock Premium. And as Peacock gains scale in the U.S., we see compelling ways we can expand internationally. We're looking to take advantage of the brand and scale of Sky across our European markets and potentially strike partnerships with local programmers and distributors in geographies where it makes sense. We plan to share more information on Peacock throughout this year. So in summary, we're all very proud and encouraged by our first quarter results. This performance is a testament to the resilience and evolution of our company. Excellent execution of our growth initiatives combined with tight cost control brings us one step closer to our balance sheet goals, and I am eager to see us return to our historical practice of repurchasing shares starting in the second half of this year. Lastly, I want to thank our team. Everyone across the company has continued to show up and innovate for our customers, audience, guests, and each other. We were recently named as one of the top five big companies to work for in the U.S. and one of the top ten inclusive companies in the U.K., a testament to the work and passion of our wonderful employees. Mike, over to you.

Thanks, Brian, and good morning, everyone. I'll begin on slide four with our first quarter consolidated 2021 results. Revenue increased 2.2% to $27.2 billion. Adjusted EBITDA increased 3.5% to $8.4 billion. Adjusted EPS increased 7% to 76 cents per share. And finally, we generated $5.3 billion of free cash flow. Now let's turn to our business segment results, starting with cable communications on slide five. Cable revenue increased 5.9% to $15.8 billion, EBITDA increased 12% to $6.8 billion, and EBITDA-less capital grew 16% to $5.1 billion. We added 380,000 net new customer relationships up 2.4% over last year's first quarter and up 27% over the first quarter of 2019. This was the best first quarter on record and was driven by broadband, where we added 461,000 net new residential and business customers, only slightly below last year's first quarter and 23% above the first quarter of 2019. We saw healthy Connect activity, and this quarter marked the lowest broadband churn in our history. This positive momentum has continued into the second quarter, and from what we see today, we anticipate total broadband additions for the year to grow by mid single digit levels compared to 2019, which aside from the extraordinary growth we had in an unusual 2020, was the best year in more than a decade. The strong customer additions coupled with ARPU growth of 4.4% drove a 12% increase in broadband revenue for the first quarter, the largest driver of overall cable revenue, and we expect this trend will continue. We also saw an acceleration in both business services and wireless. Business services revenue increased 6.1% and delivered 11,000 net new customer additions, primarily driven by continued improvement in small business. Wireless revenue grew 50% due to an increase in both customer lines and higher device sales. We added 278,000 new lines in the quarter, the best result since launching this business in 2017, bringing us to 3.1 million total lines as of quarter end. Turning to video, revenue was consistent with the prior year, reflecting very healthy ARPU growth of 6.8%, offset by net video subscriber losses totaling 491,000, which we felt mostly on the Connect side as residential churn improved year over year. We believe our residential rate adjustment at the beginning of the year was a significant contributor to both the ARPU increase and the video subscriber loss in the quarter, and we expect video losses in the second quarter will remain elevated. We currently anticipate cable communications revenue growth in the second quarter to accelerate by a few hundred basis points from the 5.9% we just reported, partly due to the comparison to last year's second quarter, which was most significantly impacted by COVID-19, as well as our focus on driving growth in our connectivity businesses. Turning to expenses, Table Communications first quarter expenses increased 1.5%. Programming expenses were up 5.5%, primarily due to the number of contract renewals that started this cycle through in 2020, combined with annual escalators in existing agreements. Looking to the second quarter, we expect programming expense growth to increase at low double-digit levels, due to the continued impact of contract renewals, as well as the comparison to last year's second quarter, which was favorably impacted by adjustments accrued for customer RSN fees. For the full year, we continue to expect programming expense to increase at high single-digit levels. Non-programming expenses declined 1.1% on an absolute basis and 5.9% on a per-relationship basis, while our customer relationships grew 5% year over year. Non-programming expenses should increase at high single-digit rate in the second quarter due in part to the comparison to last year, which reflected the slowdown in business activity due to COVID-19, as well as our continued focus on driving growth in our core broadband and wireless businesses. Cable communications EBITDA grew by 12%, with margins reaching 43.2%, reflecting 250 basis points of year-over-year improvement. These results include the important milestone of our wireless business reaching break-even for the first time since launch. Table capital expenditures increased 8%, resulting in capex intensity of 8.7%, up slightly compared to last year and driven by a 23% increase in scalable infrastructure as we continue to invest to enhance the capacity of our network. This spending was partially offset by lower customer premise equipment and support. Now let's turn to slide six for NBCUniversal. As you know, we recently issued an 8K with updated trending schedules and a new reporting format that reflects the way the business is now managed. We moved Peacock, which was previously reported in our corporate results, to NBCUniversal. And now we present NBCU in three business segments. Media. which combines our TV businesses in Peacock, studios, which combines our film and television studio businesses, and theme parks. I will discuss today's results in this new format. Let's start with total NBCUniversal results. Revenue decreased 9.1% to $7 billion, and EBITDA was down 12% to $1.5 billion. media revenue increased 3.2%, driven by 9.1% growth in distribution revenue, which reflected higher rates post the successful completion of several carriage renewals at the end of 2020, partially offset by subscriber declines, which showed sequential improvement. Advertising revenue declined 3.4%, as lower entertainment ratings and tough political comps were partially offset by more sports in the quarter, strengthened news, and the launch of Peacock. Media EBITDA declined 3.7% when including Peacock, which generated revenue of $91 million and an EBITDA loss of $277 million. Excluding Peacock, media EBITDA increased 10%, primarily driven by lower expenses. which was partly due to lower entertainment costs associated with fewer original hours aired and partly due to our new operating model. This year-over-year reduction more than offset higher sports costs resulting from additional events. Looking to the second quarter, we expect healthy growth in distribution revenue to continue. We will have significantly more sporting events compared to last year, which should result in higher advertising revenue but also a significant increase in sports-related programming and production costs. Studio revenue was flat compared to last year, primarily reflecting higher content licensing revenue offset by lower theatrical revenue. Content licensing revenue increased 14%, primarily due to licensing deals including The Office, which became exclusively available for streaming on Peacock this past January. Theatrical revenue decreased 88%, reflecting the deferral of theatrical releases due to COVID-19. Significantly fewer releases in the first quarter resulted in lower expenses, driving EBITDA growth of 66%. We're excited to be releasing Fast 9 in theaters later in the second quarter. but we delayed the release of Minions 2 from July of this year to July of 2022, which will shift the profits from 2021 to 2022 as well, as we continue to manage our film fleet to maximize value. Theme Park's revenue decreased 33.1% in the quarter and generated an EBITDA loss of $61 million, which included $100 million of Universal Beijing pre-opening costs. These results reflect Universal Orlando Resort operating at limited capacity, but trends remain encouraging as attendance continues to rebound, and we've been at or near capacity limits through spring break. Hollywood remained closed during the quarter, but we recently opened at a 25% capacity limit and expect this to move higher by June 15th. In Japan, we recently had to close our park temporarily due to rising COVID cases. but prior to this, we had seen strong demand. Looking ahead, we expect our EBITDA results to improve in the back half of the year as domestic attendance trends improve, and we remain on track to open our new park, Universal Beijing, this summer. Now let's turn to slide seven for Sky, which I'll speak to on a constant currency basis. For the first quarter, Sky revenue increased 2% to $5 billion, largely reflecting healthy growth in our UK business. Direct-to-consumer revenue increased 1.8%, with growth in the UK even stronger. This result was driven by higher average rates per customer and strong customer growth across all markets. We generated 221,000 net customer additions, the best first quarter in six years. driven by streaming across our markets, as well as steady momentum in mobile and broadband within the UK. Advertising revenue increased 3.4% as we continue to outperform the market, particularly in the UK, where the ad market is rebounding more quickly than we expected, and we are driving growth through advanced advertising. Sky generated $364 million in EBITDA in the first quarter. As expected, this reflects elevated expenses including higher sports rights amortization resulting from more events in the current quarter, as well as higher expenses associated with successfully growing our mobile and broadband businesses, and investment in key growth initiatives, which now include SkyConnect, our recently launched commercial broadband business in the UK. For the second quarter, we expect revenue growth to accelerate to low double-digit levels on a constant currency basis, due to the comparison to last year's second quarter, which was the most impacted by COVID-19, as well as continued strength in our UK business. We also anticipate significantly higher sports rights amortization compared to last year when events were paused. As a result, we expect to generate a similar level of EBITDA in the second quarter as we did in the first quarter. We were recently outbid for some of the broadcast rights for Serie A in Italy as we stood firm in our disciplined approach to sports-related costs. We believe this was the right long-term financial decision, though we expect a reduction in programming and production expenses and a potential decline in customer relationships in Italy as a result. We continue to expect Sky EBITDA in the second half of this year to accelerate from first-half levels reflecting the benefits of a reset to major sports rights, as well as a more efficient operating structure. I'll wrap up with free cash flow and capital allocation on slide eight. Free cash flow was $5.3 billion in the quarter, an increase of roughly 60% year over year, primarily due to an improvement in net working capital and higher EBITDA. Net working capital will continue to fluctuate on a quarterly basis, and we still expect the full-year drag increase relative to 2019 due to an increase in content investments, our broadcast of the Olympics, and the reversal of COVID-related one-time tax deferrals. Consolidated total capital, which includes capital expenditures as well as software and intangibles, decreased 1.1% in the first quarter to $2.5 billion, reflecting a decline at NBCU, which was partially offset by increases at Sky and Cable. We ended the first quarter with $104 billion of debt with a weighted average cost of 3.6% and a weighted average life of 14.5 years and net debt of $86 billion for a net debt to EBITDA ratio of 2.7 times. Throughout the pandemic, we have maintained an elevated cash balance to fortify our liquidity position, and we ended the first quarter with $15 billion of cash and cash equivalents. We expect to gradually reduce our cash position by deploying excess cash towards debt reduction throughout the remainder of the year as our business operations continue to recover. Finally, we remain committed to our longstanding balanced approach to capital allocation, which consists of maintaining a strong balance sheet, investing organically for profitable growth, and returning capital to shareholders for a strong commitment to our recurring dividends and our expected return to share our purchases in the second half of this year. Thanks for joining us on the call this morning. I'll turn it back to Marcie who will lead the question and answer portion of the call.

Thanks, Mike. Regina, let's open the call for questions, please.

Thank you. We will now begin the question and answer session. If you have a question, please press star and then the number one on your touchtone phone. If you wish to be removed from the queue, please press the pound key. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if there are any questions, press star and the number one on your touchtone phone. Our first question comes from the line of Jessica Reeve-Ehrlich with Bank of America Securities. Please go ahead.

Thank you. Good morning. The company clearly is on an upswing as we come out of COVID, and the leverage in the business is really apparent in the first quarter numbers. I have a broad-based question that covers basically all the divisions. In cable, it feels like the beginning for advanced advertising, we're seeing strength still in broadband. The price decrease in mobile should drive market share. In NBCU, which seems like the division with the most upside coming out of COVID, I don't know if this is the year of peak losses for Peacock, But theme parks seem like they're in a five-year growth trend. Production's coming back, et cetera. Sky, you can see the leverage. So my question finally is, where do you see the most leverage overall in each of the businesses? And can margins and free cash flow continue to improve?

Well, thank you, Jessica, for those comments. Why don't we just go around the horn, and why don't we just go from Dave to Dana to Jeff, and everybody give a crack at it. their view of the business and a chance for them to introduce themselves on the call here.

Thank you, Jessica. This is Dave. Our focus continues to be maintaining momentum around the connectivity side of the business, so broadband, residential, commercial is enormously important and a great growth engine for us. So we're going to continue to enhance broadband, keep adding to it, you know, speed, control coverage, and now streaming, and as you mentioned, mobile. So we're going to focus on accelerating mobile and just surrounding broadband with these products. So that's going to be – that's our strategy. Nothing will shake that. And in terms of EBITDA – that we like the recurring revenue aspect of the connectivity business. We like the margins that that contributes towards. We're very focused on taking out the transactions that cause customer noise. Focusing on digital, focusing on things like self-install kits, all the things that we've been talking about will continue. So I feel very good about our position in the marketplace. So there's a lot of upside still in broadband. I feel good about mobile and business services.

Hi, Jessica. This is Dana. Following up from Dave's side, from the sky angle, we're really, really happy with the fundamentals of the business. I think our Q1 results demonstrate the position that we're in, you know, subscriber numbers. that's in fact quarter one in about six years, churn is down, revenue is up, all of the fundamental factors of the business position us well to exit COVID. To be more specific on your question in regards to where do we see the most leverage, if I had to boil it down, I would say the UK. The UK is an extraordinary position for growth. It's got a very diverse revenue base with DTH having its best performance in Q1 in six years. Streaming is going well. Mobile is going very well. Broadband is growing well with a lot of innovation potential. And so I think what we see in the UK is a lot of growth left in that business and a really solid business to build upon in the rest of the portfolio.

Hi, Jessica. This is Jeff. And hi, everybody. So there's a lot of different places I could pick and choose from. i'm excited about i think first of all as we've talked about in previous calls we really adjusted our cost space across the entire company during the pandemic we didn't do this just to cut costs we obviously looked at where the business was going and changed our organization particularly on the tv side but i'm excited about uh the business being kind of adjusting the the new cost base and as we grow revenue side that's going to help And then the obvious other one that really was affected and has been affected during the pandemic is our parks business, which normally is a really, really great business, but obviously during a pandemic when you're closed, it's not a good business. It's going to be choppy getting open again as things surge and come back and so forth, but it's hard not to get excited about our parks business. The demand is there. We're seeing it in Orlando. We have no international travel yet, which is a significant part of the business, and we the capacity we've set for ourselves based on safety protocols every day. We just reopened Hollywood, and we're seeing the same thing in Hollywood. Japan is obviously going back and forth, but we're excited long-term about that park and then Beijing coming. And the other thing that's happened during the pandemic is we've continued to build attractions. So we are hitting the return of the market with some pretty exciting attractions in each of our parks. We have Nintendo. we think is one of the great attractions that we've ever built in Japan. They come in Beijing as well. We have out in Los Angeles our new pets attraction. We're getting stellar reviews, and people love it. And then most excitingly to me, we have a new roller coaster in Orlando called the Velocicoaster, Jurassic Roller Coaster, which I rode a couple weeks ago. It is both spectacular and petrifying, and I think when we open that to the public in June, it's going to be another driver for our business. So I'm very excited about the parks business, and it's the one business that's going to come back really strongly from the depths of the pandemic.

And maybe it's Mike, I'll just jump in after the and put it all together, because I think the ultimate question was, you know, what happens with free cash flow over time? What's our confidence? And I think, as we've been saying, pre COVID for a couple of years, in my tenure, you know, we've been investing in each, we love our businesses, we've been investing, so they stay relevant and strong, you know, years into the future. And while free cash flow is always lumpy as you're in different periods of time, we've been confident that we are going to grow free cash flow in the years ahead on a multi-year basis. COVID got in the way, obviously, of that story, but that's, as you recall, what we felt pre-COVID, and I continue to feel that way as we sit here now. And as everybody just chimed in, I think we see the light at the end of the tunnel of COVID and you know, all of the earnings power of our businesses that we were felt were there before COVID, I think these results say that they're still there and perhaps then some.

Thank you. Thanks, Jeff. Regina, next question, please.

Your next question comes from the line of Doug Mitchelson with Credit Suisse. Please go ahead.

Oh, thanks so much. I guess, you know, I don't know, maybe these are two quick ones, but Dave, on your side, the new wireless pricing, does that suggest another investment round in wireless, or would you just look at that as consistent with the focus on trying to drive share there? Ultimately, what's the wireless strategy, and what are you hoping the new pricing levels to accomplish? Jeff, just path for Peacock monetization with engagement coming in double expectations. My guess is you haven't seen much difference relative to your revenue expectations because of the limits on advertising. Could you just remind us When does that advertising inventory get opened up to new advertisers, and how will Peacock monetization progress from here? Thank you.

Hey, Doug. This is Dave. I'll start. So our wireless strategy has been very consistent also, and the new unlimited plans, or an opportunity for us to improve that value proposition. Still have by the gig. Now, you know, introducing, you know, unlimited. I don't, it's not going to be a material shift and an investment side. There'll be some, but not material. It's just a great addition to the portfolio. And, you know, this, we've talked about it. It was important for us to accelerate. We think it's good for broadband. It is helping broadband. We see the results. in terms of churn, and it's just a growth engine for us, period. So really happy about the 278,000 lines. This is the most line additions in a quarter since we launched. It grew revenue 50%, achieved profitability. So we're focused across the board in terms of everything that we said we wanted to do. And this is one piece of it. So focusing on every sales channel, and this is just going to be consistent with our approach. You'll probably see a bit more packaging with broadband and mobile, but that's not really different than anything that we've been talking about doing. So it's early with the unlimited stuff, but it's – We're very encouraged and we like our complete suite of products that we have in the marketplace.

Hey, Doug. This is John. Let me just take the opportunity with your question to maybe spend a minute or two on Peacock and just provide a little bit more granularity in how we're doing more broadly than your question. We are very pleased with our steady growth on Peacock, and we're particularly pleased that we chose this business model, which is an ad-supported AVOD model for the business. It was the right decision to pursue that clearly for our company. Our revenue in that model is a mix of both subscription revenue and ad revenue. If you actually break down what drives the ad revenue in the future, it's really four things we track. is signups. I think Brian mentioned in his opening that we reached 42 million signups. This is up 9 million from last quarter. And we're very pleased, not just with that growth, but with the steady growth in that over time as we've added things. The second metric is how many of those people who sign up use the service on a regular basis. We internally use a metric known as MAAs, which I think others in the industry also use, monthly active accounts. That's how many households actually use it monthly. It's either, to be granular, it's either somebody who pays, a household that pays a subscription fee or somebody who uses it monthly. By that basis, roughly a third of our signups are by our metrics MAAs. To put that in the context, that is about a third of where Hulu is today. We've only been national for less than a year. Hulu's been 13 years, so we're very pleased with how that's grown steadily. And MAA is the way we track them. I actually kind of understate the engagement because there are many people who use it, but just not enough to be an MAA if you actually made it quarterly. Assumption then we'd be up to you know another 10 million above that number So one of the upsides for us is converting those non ma signups to mas which we think we'll do over time The third metric is usage, which is is very strong double our projections And to put that in context the peak and average peacock ma is using peacock more than an average TV viewer is watching NBC so we're very pleased with that and And then finally, how do we monetize those users and usage is the CPM, which gets to your question. We set out, as you mentioned, in the sponsorship model, so the vast majority of our revenue coming out was set up by 10 charter advertisers. But we actually are exceeding the guarantees that we made to those advertisers. So we are already, even this quarter, selling some of the excess inventory on a spot basis. And we're achieving CPMs that are equal or in some cases above what we're getting on NBC Prime, which is our gold standard. That's very encouraging. And to answer your question, In Q4 of this year, that's when the sponsorship deals roll off and we start selling all of our inventory on a spot basis. But we're in early stages of the upfront right now, so we're already starting to talk to advertisers about making upfront commitments that include Peacock. Let me just mention one other thing. All of this success is without most of the programming that we anticipated. We anticipated launching with the Olympics. We have not had. We have two Olympics in the next seven months. We're going to do some pretty exciting things on Peacock with our Olympics programming. And then even though we're back in production, as Mike mentioned or Brian mentioned, on 30 shows right now, most of those have not hit Peacock yet. So the strength of our original programming that we had planned to launch with is really coming in future quarters. So, you know, very encouraged by Peacock going forward, very steady growth so far, and we're confident about the future.

Thank you both. Thanks, Doug. Regina, we can take the next question.

Your next question comes from the line of Ben Swinburne with Morgan Stanley.

Good morning. One on cable, one on sky. Maybe for Dave or Dave and Brian, thank you for the comments in the prepared remarks on the network. As you know, there's a lot of focus on symmetric offers, particularly in Washington. And I'm just wondering, from a business point of view, do you think there's real demand there? And what kind of timeline should we be thinking about in terms of adding that capability or more of that capability to your network? And can you talk a little bit about what that might mean for capital intensity, which I'm sure is what most investors are focused on? And then for Dana, there's been an unbelievable amount of kind of tectonic shifts in the European sports landscape just this year. And you mentioned Syria. Can you just put all this in context when you look at the Bundesliga deal, what we're reading about with the EPL, Syria? Is this helpful to Sky hitting its EBITDA targets of doubling over time, or is this a headwind? Because these are obviously massive contracts. Can you just talk a little bit about the soccer background? That would be great for all of us. Thank you.

Dave, why don't you talk a little bit about Symmetrical? Sure. Hi, Ben. Thanks. You know, this is, you know, a focus for us over the next several years. But, you know, overall, our approach, our strategy is to continue to enhance broadband completely in that you want to have the best overall speeds in the marketplace that go from the house or the business, great Wi-Fi coverage within where people are, control. Streaming, now mobile, is part of the overall solution and making it all seamless. So it's the overall experience that we're focusing on, but we continue to improve speeds along the way. We have 20 years in a row of constant increases in terms of speeds, and we address both downstream and upstream. Let me put usage in perspective in terms of what we've seen pre-pandemic and most certainly through the pandemic where a network met the moment and then some but putting usage in perspective perspective upstream is less than a tenth of downstream and so name the application whether it's you know video streaming whether it's gaming uh your host of education applications um our our network is i think really stood up as brian talked about earlier and so You know, while our competitors are spending heavily to try to catch up to us, you know, we've already, you know, they're testing, and we're not standing still. We've done two gigabits of download speed. We're testing symmetrical, you know, one gig. And so we have an architecture that I think is going to continue to put us in position to do it in an effective and a very efficient, capital-efficient way. So, again, not standing still. So, we feel very good about the long-term architecture because of DOCSIS. DOCSIS 3.1 that we have is a strong roadmap that we can deliver. And so, right now, as we sit here, we have 1.2 gigabits deployed throughout our entire footprint. We've increased the upstream speed. And so over time, I think we can address symmetrical issues. But in the near term to midterm, we are in a very good position. And I do not see an incremental need for upgrade in terms of capital. We constantly invest in the network. It's not something that just happened overnight. We invest all the time. And we're making our infrastructure more efficient as we virtualize things like CMTSs, and we're just taking cost out of how we deliver this. Couple that with the great DOCSIS standard, I think we're in a pretty good position. So, you know, broadband, you know, commercial and residential is growing. It's a, you know, great business. We're going to continue to strengthen our lead position. And, you know, I think it's going to continue to be a great return on investment for us. And if we just decide to accelerate our plans, you know, our capex intensity, you know, might be a little bit higher one year versus the other. But, you know, we're still going to be in the ballpark of what we've been doing. And it's just not going to be, you know, upticked by a material amount. So I feel very good about our position, and I really like our long-term roadmap.

Ben, this is Dana. Good morning, and thanks very much for your question. There has certainly been a lot of noise around sport and football in Europe over the past four or six weeks. But if you put it all into context, what I would say is that Sky has had a very good track record of renewing sports rights, and we're generally feeling good that that track record will continue. With English Premier League, at the last renewal, we made a deliberate choice to reduce our investment by 15%, but we still secured an improved set of rights. In Bundesliga, for the upcoming season, we continue to hold all of the rights to the very best games, but we were able to secure a discount for our previous contract. And with Syria, I think it just demonstrates that we will walk away when we feel the economics don't work. I think more importantly, and to broaden the periscope a bit, I would underscore that Sky's been on a journey for over 15 years to really expand our value proposition beyond sport. And that's worked extraordinarily well. And I think it comes through in the performance of the business. The fundamentals are in the right place. Our customers are taking more products and services seriously. Our viewing is up significantly on sky channels. Our churn is significantly lower. Sky streaming is growing considerably, and the aggregation platform is really working, as Brian mentioned, with two-thirds of customers in the UK. So I think we feel very, very comfortable that the business fundamentals are very well positioned across all of our markets. We really like the position that we're in, and we feel confident we can continue to build and grow on these fundamentals. So I think The core of your question is to remain confident in our ambition to double the EBITDA over the next several years. And I would say, yes, we do remain confident in that ambition. And I would say that's based on confidence in a range of factors. You know, a strong bounce back that we're already seeing after the effects of COVID, our ability to continue to use the retail engine to drive the customer base and reduce churn through aggregation and our strategy for multi-service bundles. A very good disciplined cost focus. You know, the team is executing very well. Secure content supply and really a diversification of that to our expansion into originals and exclusives has worked very well. And we still see a lot of strength in the UK growth opportunities. So all of that gives me a lot of confidence to say we're on track for our ambition of doubling EBITDA over the next several years. Thanks.

Thank you.

Thanks, Ben. Regina, can we take the next question?

Your next question comes from the line of Bill Cusick with JP Morgan. Please go ahead.

Hey, guys. Thanks. I guess a couple of follow-ups here. Brian, as Ben said, thanks for the detail on broadband, and clearly it's not just about speed. It's interesting that when the market is worried about competition, you guys are raising the bar on yourself for ads. What's the mix of drivers that you see between strong market growth and share shifting? And then second on mobile, it looks like you're hiring a lot of people in that business, probably getting ready for a network build. Can you expand on where that network effort is headed? Thanks.

So let me start, Dave. Why don't you also feel free to jump in on, you know, I think Dave gave pretty complete answers on broadband. We do believe that by having the best product and I, and, I think we have that. You're in the enviable position. And so we balance constantly looking at new technologies, where competitors might be coming over the last, I don't know, 15 years. We've had lots and lots of fiber competition. We've had lots of overbuilt competition, DSL competition. We've added 20 million broadbands just in an over consistent period of time. So I think we know how to compete. We go for market share, and we do that while we're able to increase the EBITDA and free cash flow from the business. We really focus on the business sector. I haven't talked a lot about that today. They had a great quarter and real momentum. As all businesses are reopening, people are rethinking their relationships, and we have the latest, greatest, best technology. And you'll be hearing a lot. or I think from our business services unit. In wireless, just to add to all the points Dave made about our focus on mobile, while yes, we bought some spectrum and we'll be doing some trials to see how we can offload, and that really will prove to be a cost savings if we get it right in dense areas. That whole relationship requires a healthy partnership with a wireless MNO. In the case of Verizon, we're really pleased with the partnership. We restructured it so that we're able to make these unlimited offerings in a way that continues our profitability march and real value for consumers and in a way that Verizon is happy that their network is getting used. Good work to our team that worked hard and to Verizon's team for bringing great new offerings to the market with Xfinity Mobile. So net-net, I think both of those important two products, and we now bundle them together, put us in a position to continue to grow and be able to compete with, you know, where the world evolves itself. Thanks, Brian.

Thanks, Bill. We can take the next question, please.

Your next question will come from the line of Craig Moffitt with Moffitt Nathanson. Please go ahead.

Yeah, hi. A question for Dave, if I could. Two, actually. First, can you talk about how your cable segment is preparing for federal stimulus and how you think that's, what impact that's likely to have on your business? Can you quantify at all what you expect to come from stimulus, including how many essentials customers you have and whether you expect those customers to now generate higher ARPU under the stimulus plan. And then on the wireless business, I just want to drill down on a question that was asked before. With the new pricing, do you think that you can still be EBITDA positive in that business even with the new pricing, which presumably will mean at least somewhat lower ARPU going forward?

Well, thank you, Craig. So, first on stimulus, there probably will be some non-pay benefit. And there are a couple different ways it could play out. But our voluntary churn and non-pay churn have been consistently been running low for the past year and been trending lower pre-pandemic. So, you know, earlier term performance was regardless of when, you know, stimulus checks were received. But, you know, it could be some little bit of additional, you know, support around that. But I think you have to look at the longer-term trends. You know, our performance overall, you know, reflects what we've been talking about. You know, building a great network and, you know, improving the products, you know, constantly. So, yeah. I think there could be just a little bit of non-pay support, but again, we're already doing fairly well there. In regards to wireless, I think in terms of EBITDA and the new pricing, the way that we think about this, it's a long-term growth opportunity. Certainly for broadband, we've talked about it, but when you look at the overall marketplace, we feel good about You know, that we have a little over 3 million lines, you know, less than 2 million customer relationships, mobile relationships out of a pool of 33 million customer relationships. So low penetration, lots of runway. So we always, and take a look at any of our approaches to key categories, we take a very disciplined approach towards packaging and and improving value. Yes, we feel very good about Unlimited as part of the portfolio and not changing the strategy or materially the results in terms of ARPU and mobile and the impact towards EBITDA. Overall, again, Brian mentioned it, we really appreciate the Verizon relationship. It's important for us and I think we're good for them. Very good for them, and so it's a good win-win for us to be able to add this new set of unlimited to already strong portfolios. So feel good about our ability to continue to drive healthy EBITDA with it. Thank you.

Thanks, Craig. Regina, next question, please.

Your next question will come from the line of John Hudlick with UBS. Please go ahead.

Great. Thanks, guys. A couple of follow-ups for Jeff. Jeff, lots of news in terms of sports rights in the U.S. as well, with you guys adding WWE and the NFL deal and not renewing NHL and the shutdown of the NBC Sportsnet. So can you talk about your strategy going forward and maybe what were some of the drivers of those decisions? And then also back to Peacock, the big D2C platforms are obviously spending sort of multiples of what Peacock is on content. And while I realize those are fundamentally different services, should we expect the strategy to evolve over time with potentially further investment to capture growth and engagement? Or do you guys think you guys are fully capturing the opportunity at current levels? Thanks.

Yeah, thanks, John. Let me take them in order. So first of all, we're really thrilled to continue our NFL relationship. That was an important one for us. The NFL really kind of encompasses what we want in sports rights. It is obviously very important for our traditional business, number one show in prime time for over a decade. And with our Al and Chris and now Drew Brees and Mike Tirico and our talent, that is a very important tent pole for our existing business. At the same time as the business evolves and moves to streaming and on demand, That deal also gave us a lot of content that now we can use on Peacock and our other platforms, whether it's simulcasts of games and exclusive games or additional rights to show highlights and other footage. It's really the perfect deal with the premier sport in the U.S. So that really is kind of our model. The Olympics is the same thing where we have rights to use content across multiple platforms. Same thing with golf, which is an important tentpole for us, and we'll continue to be aggressive and look for opportunities that not only we can get for a price that we think we can get a return on, but also properties where we can drive usage both linear and digital. And WWE is kind of the perfect one on that where we were able to take a franchise that was already important to us on USA and our linear networks and extend it across into Peacock in a way that's been very successful. So we're thrilled with our portfolio now. We'll continue to be opportunistic. We'll find opportunities that match all those things. Turning to Peacock Spending, I think it's important to recognize that we really have, and Mark Lazarus has laid this out pretty well, we want to build our television business to match what consumers are doing. Consumers are watching content across a variety of different platforms, not just linear platforms. not just streaming, but lots of different ways. And our spending really should be looked at in that context, not just what we're discreetly spending on PCOT, but what we're spending across our whole portfolio. And when you look at that, we match up pretty well versus our competitors. And with PCOT, we actually don't, as I mentioned earlier, we don't even have the benefit of most of the spending that we had planned because of the production delays with COVID. At the moment, we're pretty pleased with the content we have on Peacock and the content that's coming in future days. And as I said before, with the success of Peacock, and I think Brian mentioned this in the opening, we have a lot of options going forward, and we'll continue to watch the way the world changes and how our product evolves, and we'll evaluate those options.

Great. Thanks, Josh.

Thanks, Don. Regina, we have time for one last question.

Our final question comes from the line of Michael Rollins with Citi. Please go ahead.

Thanks, and good morning. I was curious if you could share how much of the programming spend within NBCU is exclusive to your platform, whether created by the studio, live sports, news, and where do you see that mix going over the next few years, especially as you look to expand the reach of the Peacock platform? Thanks.

Yeah, thanks, Don. I would say virtually all of our programming, the vast majority of our programming is exclusive. The exclusivity of programming is very, very important to us. And it's not just the traditional exclusivity, whether it's an SNL or a drama, but it's the exclusivity of a Rachel Maddow every night on MSNBC or exclusivity of our various sports properties, most notably the Olympics. So exclusivity is critical when you look at programming, not just in NBC, but across the new digital platforms, too. I don't know if that answers your question, but, you know, virtually all of our programming is.

Thank you.

Great. Thanks, Mike. And I just want to thank all of you for joining us on our first quarter 2021 earnings call. We hope you all continue to stay healthy and safe.

There will be a replay available of today's call starting at 12 o'clock p.m. Eastern Time. It will run through Thursday, May 6th at midnight Eastern Time. The dial-in number is 855-859-2056 and the conference ID number is 5168008. A recording of the conference call will also be available on the company's website beginning at 1230 p.m. Eastern Time today. This concludes today's teleconference. Thank you for participating. You may all disconnect.