Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's third quarter 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. Marzi Reivicker. Please go ahead, Ms. Reivicker.

Thank you, Operator, and welcome, everyone. Joining me on today's call are Brian Roberts, Mike Kavanaugh, Jason Armstrong, and Dave Watson. I will now refer you to slide two of the presentation accompanying this call, which can also be found on our investor relations website and which contains our safe harbor disclaimer. 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 schedule issued earlier this morning for the reconciliations of these non-GAAP financial measures to GAAP. With that, I'll turn the call over to Mike.

Good morning, everyone, and thanks for joining our third quarter earnings call. It was another strong quarter for us with adjusted EBITDA up 5% and adjusted EPS up 13%. We generated $4 billion in free cash flow, which, combined with our expectation of Hulu proceeds in the near future, contributed to a pickup in our share of purchases to $3.5 billion in the quarter. Our steady performance has been a direct result of how we've always run our company, which is with a focus on industry-leading performance both operationally and financially in each of our businesses, combined with a long-term, customer-centric approach to decision-making that ensures each business is positioned to win in the future. This has all been facilitated by a philosophy of investment in our businesses that has remained consistent through different economic and credit cycles and particularly through the recent global pandemic. Now I'd like to highlight four areas in the quarter that show how this strategy is playing out before handing it over to Jason to review this quarter's results in full. The first area I'd like to highlight is residential domestic connectivity, where we are very pleased with our performance and strategy as we navigate a highly competitive broadband marketplace. The customer experience provided by our broadband network which has ubiquitously available gig speeds today and is on a path to ubiquitous multi-gigabit symmetrical speeds, combined with our wireless offering through our MVNO with Verizon and our own network of over 20 million Wi-Fi hotspots, enables us to provide world-class connectivity both in and out of the home to all of our customers everywhere in the most cost-effective and capital-efficient manner versus our competition. Our broadband network and product leadership continue to drive strong residential revenue growth, which was up nearly 4% this quarter, fueled by very strong ARPU growth of 3.9%. We're confident in our ability to drive continued ARPU growth because of our focus on constantly improving the product experience through investment and innovation, thus delivering more value to our customers. Having a truly excellent Internet experience, as reflected in speed, reliability, coverage, security, and latency, is constantly increasing in importance to all households as a result of the consumer experiences it enables. One of the biggest catalysts for recent growth in data usage is the accelerating transition of sports viewership to streaming platforms. The switch of a single Thursday night NFL game to streaming moved peak data usage on our broadband network from Sunday night to Thursday night, and that game comprises roughly 25% of all Internet traffic on Thursday nights. Every Internet service provider, fixed wireless in particular, will really be put to the test as this transition of sports to streaming continues, especially come January when, for the first time ever, an NFL playoff game will be aired exclusively on a streaming platform which will be our very own PCOC. The second item I'll highlight is PCOC, which added 4 million paying subscribers during the quarter, saw greater than 60 percent revenue growth versus a year ago, and had the first year-over-year improvement in EBITDA since our launch in 2020. While we report standalone PCOC metrics, given the significance of this initiative, we manage it as part of the broader NBCU media segment. which includes the broadcast and cable networks, to best leverage the advantages we bring to the streaming landscape. We continue to be pleased with our progress in the few short years since we've pivoted our streaming strategy as a result of the ownership changes at Hulu. Looking ahead, we are sticking to our plans and still expect 2023 to be the peak year of EBITDA losses for Peacock, though we are now expecting 2023 Peacock losses to come in around $2.8 billion versus our original $3 billion loss outlook. And for 2024, we expect to show meaningful EBITDA improvement over 2023. The third area to highlight is our parks business, which generated a record high level of EBITDA, surpassing the previous record that we just set in the second quarter. The reaction to Nintendo and Hollywood in Japan continues to be fantastic, and we are very excited about bringing the experience to Florida soon. I was just in Orlando with the park's leadership team last week reviewing our plans for the new Halloween Horror Experience in Las Vegas and Kids themed park in Frisco, Texas. I also spent a few hours on a site tour of the Epic Universe Park, which is deep in construction and is simply breathtaking. So thanks to the momentum of our third quarter results and what we have in the pipeline, I could not be more excited about our parks business. The final area to highlight is our studios business, which is having a great year with three of the top five box office hits for the year so far in Super Mario Brothers, Fast 10, and now Oppenheimer, which grossed more than $900 million in worldwide box office in the third quarter and became the highest grossing biopic of all time. This is a continuation of our solid track record where, since 2020, we've had at least two of the top five movies in worldwide box office. We believe that success in this business is not formulaic. It's a craft rooted in creativity and originality. We've long focused on assembling a team of the most innovative filmmakers, Chris Nolan, Chris Melendandri, Steven Spielberg, Jason Blum, and Jordan Peele, to name a few. which positions us very well for the future in the studio's business. More broadly, it is our consistent investment approach through past business cycles and the pandemic that is the reason for much of the success we're experiencing today. We remain steadfast in supporting our businesses, even those that were hit hard during that time period. For example, in studios, we never stop believing that people want to experience great films in theaters, and that conviction enabled us to attract new partners like Chris Nolan, who made a masterpiece in Oppenheimer. Similarly, while our parks business was closed or at limited capacity, we continued to invest heavily in our existing parks, including the Velocicoaster in Orlando, Secret Life of Pets in Hollywood, and the Nintendo Lands that I mentioned earlier in Los Angeles and Osaka, and we will be bringing Epic Universe to life in 2025. Our strong investment-grade balance sheet enabled these investments and puts us in a strong and enviable position today. Now, the business world must deal with the pressures of much higher interest rates, which I believe will asymmetrically advantage us given our low leverage and the long duration of our debt. Since the end of 2018, we have refinanced over $40 billion, or nearly 40% of our debt obligations, reduced net debt from $108 billion to $88 billion today, lowered net leverage by a full turn from 3.3 to 2.3 times, increased the average life of our debt by more than four years to 17 years, while reducing the weighted average cost of our debt to 3.6% from 3.8%. Today, 97% of our debt is at fixed rates compared to just 82% at the end of 2018. We accomplished this while at the same time returning $45 billion to shareholders, including $24 billion via share purchases and $21 billion in dividends. To sum up, we're in a great place, especially given how the competitive dynamics in our industry might evolve in this higher for longer interest rate environment. I expect that our focus on building businesses that are market leaders for the long term through strong execution, investment, and innovation will keep us in one of the strongest positions to perform for our customers, employees, and shareholders. Jason, over to you.