Comcast Corporation

Good morning, ladies and gentlemen, and welcome to Comcast's second 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 of Investor Relations, Ms. Marzi Reivicker. Please go ahead, Ms. Reivicker.

Thank you, Operator, and welcome, everyone. Joining us on today's call are Brian Roberts, Mike Cavanaugh, 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.

Thank you, Marcy, and good morning, everyone. Before I hand it over to Jason, I'd like to comment on three key elements from the quarter. One, broadband, two, parks, and three, the NBA. So first is broadband, where the competitive intensity that we've seen for the past several quarters, and which is particularly felt in the market for price-conscious consumers, remains essentially unchanged. But throughout this period, our broadband strategy has been consistent and we remain confident in our plan. We are focused on generating healthy broadband revenue growth by striking the right balance between rate and volume and relying heavily on market segmentation that I'll speak to in a minute. As a result, in the second quarter, ARPU grew 3.6%, which was within our historical range of 3 to 4%. Despite the competitiveness of the recent past, we've maintained a market-leading base of 32 million broadband customers by refining our go-to-market approach to create options that fit each of our customers' lifestyles and budgets. Providing the best products with flexibility and choice at different value points has served us extremely well for many years and remains the core of our playbook. Of particular note this quarter, we launched our suite of now products, which are high-quality Internet, mobile, and streaming TV offerings designed to be incredibly simple with attractive all-in pricing with no contracts or credit checks. These are great options for the price-conscious segment and especially for those impacted by the end of the government's ACP program. While we are pleased with our enhancement to our offerings for the price-conscious segment, The reality is that the vast majority of our customer base subscribes to more premium products, where we feel great about our market position relative to fiber, which is our true long-term competitor. We are investing in additional network capacity, multi-gig speeds, and in-home Wi-Fi technology to capitalize on the Internet consumption trends we are seeing. One of the most important metrics we monitor is the magnitude of data traffic flowing across our network. And again, we saw a double-digit, year-over-year growth this quarter, with broadband-only households consuming over 700 gigabytes of data each month. And our customers continued to take faster speeds, with around 70 percent of our residential subscribers receiving speeds of 500 megabits per second or higher, and one-third getting a gigabit or more. These positive consumer trends play to our strengths and will only accelerate with the shift of live sports to streaming, which together with entertainment on streaming accounts for nearly 70% of our network traffic today. My final thought on broadband is the importance of bundling with mobile. With 90% of Xfinity mobile smartphone traffic traveling over our Wi-Fi network, these two products work seamlessly together to benefit our customers from both the product experience and financial value standpoint. We are very pleased with the momentum we saw in wireless this quarter, where our line additions were again above 300,000 and nicely up year over year. Our new converged offers resulted in better overall yield and awareness, as well as higher multi-line attach rates, and we are excited for some of the new mobile offers tied to the Olympics, which will be introduced to the market in just a few days. Now let's turn to parks, where our results were down in both revenue and EBITDA when compared to last year's record performance, with two-thirds of the decline driven by lower attendance at our domestic parks. We attribute this to a number of factors. First is what now appears to be a COVID recovery pull-forward of a magnitude we hadn't previously appreciated. I think it's important to zoom out and look at how this business has trended over the past few years. Going back to 2022 and 2023, parks were clearly the early beneficiaries of substantial rebounds in tourism and travel after the pandemic, resulting in a surge in demand that contributed to us reaching record results for both of those years. More recently, other travel options including cruises and international tourism given the strength of the dollar, have experienced their own surge in demand, which caused visitation rates at our parks to normalize. The second factor affecting attendance at our domestic parks is the timing of our investments in new attractions, where we are light in Florida in advance of next year's opening of Epic, and our lapping of Super Nintendo World in Hollywood is creating some headwinds for us as well. While the park's results are below our original expectations for the year, We still view parks as a terrific long-term growth business for us. We couldn't be more excited about the opening of Epic Universe in 2025. As we've been releasing new details about Epic's five immersive worlds, the consumer reaction has been tremendous. And recently, we opened an Epic Universe preview center in Orlando, and the foot traffic and guest enthusiasm have been off the charts. So we look forward to Epic Universe having a meaningful impact by driving incremental attendance, longer visits, and higher per-cap spending once the park opens in 2025. Finally, let me talk about the NBA. Our expectation is that soon an 11-year rights deal between ourselves and the NBA will be announced. We don't believe that the resolution of matching rights will affect the package that we expect to be awarded. This package, which begins with the 2025-2026 season, includes 100 NBA games each regular season across NBC and Peacock, which is more than any other media partner and more regular season games than each existing partner has under the current rights deal. For playoffs, we will have first and second round games each year exclusively on our national platforms. and six NBA conference final series over the course of the term of the deal, which is more playoff games on average each year than any other media partner. And exclusively for Peacock will be approximately 50 national regular season and postseason games, including national Monday night games and doubleheaders. Additional elements of the NBA package include the annual NBA All-Star Game and All-Star Saturday Night each season, the season-opening NBA tip-off doubleheader each season, a special doubleheader on the MLK holiday, and select NBA games and every NBA All-Star game on Telemundo. Beyond the NBA itself, we're excited that our package includes WNBA, where starting in the spring of 2026, we'll have more than 50 WNBA regular season and first-round playoff games each season across Peacock, NBC, and USA. And we'll also have games in seven WNBA conference semifinals and three WNBA final series. For USA Basketball, we'll have the rights to USA men's and women's games leading up to the Olympics and FIBA World Cup. Sky Sports will air all of NBCUniversal's NBA and WNBA games in its markets. And finally... Xfinity will be the NBA and WNBA's marketing partner in the video category. Now I'd like to take a moment to explain why we're so excited to partner with the NBA. First, it brings in a broad, diverse, and youthful audience that is culturally relevant and further expands NBCUniversal's tremendous reach across broadcast and streaming. This new fan base will also allow us to create new entertainment content that will work beyond the basketball season with exciting opportunities for companion programming and marketing collaborations that tap into the NBA's pop culture appeal. Second, the nine-month basketball season completes our year-round calendar for sports, which already includes the NFL, Olympics, Premier League, NASCAR, PGA Tour, Big Ten, and World Cup, and our NBA package will establish much-watched Sunday, Monday, and Tuesday night traditions on NBC and Peacock. Third, we are uniquely able to drive strong value with the NBA in multiple ways. First, by growing ad sales by selling an NBA ad inventory package with the rest of our marquee programming. second, by acquiring and monetizing subscribers both on Linear and Peacock, and third, by optimizing NBC Universal programming investment across sports, entertainment, and news. The NBA's decision to partner with us is a testament to our breadth and reach, our operational excellence in sports and innovation, and our decades of experience delivering world-class content to consumers. Much like our longstanding relationships with the NFL and the Olympics, We look forward to putting the weight of our entire company behind our partnership with the NBA for decades to come. Before I hand it over to Jason, I want to share one final thought. In just a few short days, we have the honor of kicking off the 2024 Olympic Games in Paris. This will be NBCUniversal's 18th Olympic Games as a U.S. broadcaster, dating back to 1936 when we first covered the historic event on NBC Radio. It is one of the great moments of pride for our company, and I want to thank the 3,000 people working to bring all of the action, excitement, and incredible stories to our viewers across the country. Jason, over to you.