Comcast Corporation

Good morning, ladies and gentlemen, and welcome to the Comcast Third Quarter 2022 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 Executive Vice President, Investor Relations, Ms. Marci Reivicker. Please go ahead, Ms. Reivicker.

Thank you, Operator, and welcome, everyone. Joining me on this morning's call are Brian Roberts, Mike Kavanaugh, Dave Watson, Jeff Schell, 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 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 the company and our results this quarter. We're reporting adjusted EBITDA growth of 6%, adjusted EPS growth of 10%, and significant free cash flow growth while also investing in our future and returning a record high amount of capital to our shareholders. The strong financials today are a testament to our focus on driving profitable growth through innovation, as well as a reflection on the professionalism of our employees. Together, I believe we are collaborating and executing at the highest levels. I especially want to recognize and publicly thank all of our teammates in Florida, as well as those who traveled to Florida over the last several weeks. They worked tirelessly to assist customers who were impacted by Hurricane Ian, even while many of these employees had their own losses. This was a devastating storm, particularly for us, as we are the primary cable operator in most of the areas where it hit. and we expect this affected about half of our traditional Florida seasonal customers. Digging into the third quarter, our results at Cable Communications, again, underscored the impressive consistency in this business, with 5% EBITDA growth and 120 basis points of year-over-year margin expansion, bringing us to 45.1%, our highest margin on record. While we are still in a challenging environment in terms of depressed move activity and increased competition from new entrants, we were pleased to see that back to school provided a tailwind and we ended the third quarter with 14,000 net new broadband subscribers. There have been four primary drivers of revenue growth at our cable segment. Residential broadband units, residential broadband ARPU, wireless and business services, And while we don't anticipate residential broadband units to be a significant driver for now, we expect to maintain healthy growth in the other three, leading to continued strong financial performance at cable for the foreseeable future. My confidence stems from the fact that we have always been able to strike the right balance between units and profitability. We compete aggressively while also staying focused on investing in and managing the business to deliver long-term profitable growth, which is exactly what this quarter has shown. We have a distinct competitive advantage that goes beyond just fast and consistent speeds. We provide a differentiated and superior experience within the home, which is the foundation of our ARPU growth. For example, we offer reliable Wi-Fi coverage in every room, device control, and cybersecurity features, and a world-class entertainment platform, as well as other complementary solutions like Xfinity Mobile that increase the value and utility of our broadband product even more. All of this is only getting better as we further improve our network, and we're making great progress. During the quarter, we announced that we have begun to roll out multi-gig download speeds combined with up to five to 10 times faster upload speeds. And we expect to have this available at 20% of our footprint by the end of this year, and to the vast majority of our footprint by the end of 2025. Directly on the back of this, we're completing the core technical foundation for 10G. And we're transitioning to a cloud-based, virtualized network as we work towards DOCSIS 4.0, which will enable us to deliver multi-gig symmetrical speeds to customers beginning in the back half of next year. Looking further ahead, the combination of our high-capacity network, differentiated broadband experience, and our terrific MVNO and wireless puts Comcast in a winning position to offer in-home and mobile connectivity that is both robust and ubiquitous, and it doesn't involve trade-offs. which is going to become even more important as people's level of data consumption and overall expectations continue to rise over time. On average, our broadband customers who don't subscribe to traditional video from us are already using nearly 650 gigabytes of data per month, and that's just today. We are doing a fantastic job leveraging our wireless business. We're still in the very early growth phase in penetrating this segment. and we're having a lot of success. We added 333,000 wireless lines, the most of any quarter to date. And this morning, we announced that we now have over 5 million Xfinity mobile lines, and we're just getting started. So summing up, we're pleased with our strong financial performance at cable. We're encouraged by the long-term trends in demand for connectivity and our competitive advantages, and we're confident in our future growth. At NBCUniversal, we saw some great momentum, with EBITDA growth of 25%, despite the tough comparison to the Tokyo Olympics last year. Our parks segment continues to be a real standout, generating the highest quarterly EBITDA on record, driven by growth at each of our geographies, including Beijing, which hit profitability for the first time since the grand opening last September. We're seeing clear evidence that the investments we made throughout the pandemic continue to pay off. We launched Super Nintendo World in Japan, the Velocicoaster in Orlando, Secret Life of Pets in Hollywood, and our drumbeat of innovation goes on. For example, Super Nintendo World will open in Hollywood early next year. We're adding another Nintendo-themed area, Donkey Kong, to Japan in 2024. And I'm especially excited for Epic Universe to open in the summer of 2025, which will transform Universal Orlando into a week-long destination. Studios also performed exceptionally well, resulting from a huge summer box office led by Jurassic World, Minions, Black Phone, and Nope. Our leadership is driving change in the industry. Our flexible windowing strategy has enhanced the overall profitability of our studios business. And it's also had a significant positive carryover to Peacock, which just started to benefit from our new pay one agreement. At the end of the third quarter, Peacock had more than 15 million highly engaged paying subscribers in the U.S., On top of that 15 million, Peacock also had approximately 14 million bundled and free users, totaling around 30 million monthly active accounts. Peacock has become the best streaming value in the market, providing customers with a massive premium content offering across movies, TV entertainment, sports, and news in English and in Spanish. And with less than five minutes of ads per hour for just $5 per month It is really a great value. Our sports content is unmatched, with customers enjoying live coverage of the biggest leagues and events, including the NFL with Sunday Night Football, MLB, Premier League, Notre Dame, Big Ten starting in 2023, as well as the WWE. And marquee events, including Super Bowl and Olympics, French Open, U.S. Open, Tour de France, Triple Crown, and later this year, the World Cup. We also provide the best of other sports with very passionate fan communities, including IndyCar, Supercross, and track and field. We're seeing a nice uplift from our next day broadcast, which at last are exclusively ours. And coming up through the rest of this year and into 2023 is a strong slate of highly anticipated originals from proven creators, including The Best Man, Mrs. Davis, Poker Face, and others. While it only launched a little over two years ago, Peacock is already an important part of our portfolio and reflects how we're running our media business holistically. Switching gears, the UK and other European markets have been adversely affected by the Ukraine conflict, as we all know. Higher energy costs, higher interest rates, higher overall inflation and currency headwinds. This quarter, we took a non-cash charge as a result of all of this at Sky based on this environment, which Mike will talk a bit more about. Our Sky team is working hard amidst this changing economic backdrop that's putting pressure on the average customer in the region. We remain focused on customer retention as well as providing the best experience and value in entertainment and connectivity. which contributed to the highest quarterly customer growth since we've owned Sky, including some nice momentum in our broadband and wireless business. We are keeping an eye on churn and acknowledge that ARPU may be affected in the future as customers deal with this unstable and inflationary environment. We are successfully managing through a variety of measures, and we remain disciplined on our cost structure. We reset the majority of our major sports rights within the last two years and are looking for more efficiencies in a number of areas. So looking at the company as a whole, all of us are paying attention to economists and other experts' view about how some of these issues in Europe may come to the U.S. And while we are certainly not immune to potential macroeconomic headwinds, I firmly believe that Comcast is in a very strong position relative to our peers and most other companies. We are a leader in very large and highly profitable markets, and our healthy balance sheet and substantial free cash flow generation enable us to continue to invest organically in our strategic initiatives while simultaneously returning a substantial amount of capital to our shareholders. We pay nearly $5 billion in dividends per year, and we bought back $9.5 billion of our shares year to date through the third quarter. We have a great business, including a fantastic team. Earlier this month, we announced that we promoted Mike Cavanaugh to president. For the past seven years, Mike has been an incredible leader, partner, and friend. And we are both very focused on continuing to innovate and grow this wonderful company for all our employees, customers, and guests. So it's my pleasure to hand it over to Mike.