CEO: Comcast Added 1 Million Broadband Subs Annually for Past 15 Years

A silver lining to pay-TV operators in the burgeoning over-the-top video ecosystem has been the the requisite need for high-speed Internet to stream Netflix, Hulu, Disney+ and Peacock into homes and on portable devices.

Comcast, the largest cable TV operator in the country, has seen its pay-TV subscriber base hemorrhage members — more than 1.5 million in 2020. At the same time, the cabler has added record numbers of broadband subs — 461,000 in the first quarter, ended March 31. It ended the period with more than 31 million broadband subs, compared with 19.3 million video subs.

Comcast Cable CEO Dave Watson

Speaking May 12 on the virtual MoffettNathanson 8th Annual Media & Communications Summit,  Dave Watson, CEO of Comcast Cable, said the company has added more than 1 million high-speed Internet subs per year for the past 15 years — despite having 40% of its customer footprint beset with competing services.

“It’s a very competitive environment,” Watson said, adding that offering a variety of broadband options, including data speeds, to consumers helps.

“One of the things missed is that yes, most of [our] customers are 200 megabits and above, but we have a wide variety of options,” he said. “And we’ll compete in every segment we go up against.”

Watson said the $3.2 billion in broadband stimulus from the CARES Act available today for the first time for households affected by the pandemic would not have a material impact on Comcast’s connectivity business going forward.

The “Emergency Broadband Benefit” is a federal government program designed to help eligible households pay for higher speed Internet service during the COVID-19 crisis. The program could compete with Comcast’s signature digital equity initiative — Internet Essentials — the nation’s largest broadband adoption program. In 10 years, Comcast claims it has helped connect 10 million low-income Americans to high-speed internet at home, most for the very first time.

“We’re excited and have teams ready to take orders [for monthly service as low as $9.99, which includes a modem],” he said, adding that Comcast has redoubled efforts keeping public schools and libraries connected with broadband.

“We think it’s a good opportunity as well,” Watson said. “We’ll go where the customer wants to go.”

AT&T Keeping DirecTV Cards Close to Vest

Dish Network’s Charlie Ergen may think it’s “inevitable” about a satellite TV merger with AT&T’s DirecTV, but AT&T COO John Stankey is keeping his cards close to the vest.

Speaking March 3 at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco, Stankey appeared open to industry consolidation while underscoring the strength of satellite TV’s rural customers.

Characterizing any merger as “a little problematic” due to regulatory issues, Stankey reiterated that the $48.5 billion acquisition of El Segundo, Calif.-based DirecTV in 2015 was always about securing video customers for future distribution technology, i.e. over-the-top video and high=speed Internet.

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“We will continue to offer satellite and DirecTV where it has a rightful place in the market, places where cable broadband is not prevalent, oftentimes, more rural or less dense suburban areas,” Stankey said. “We’ll continue to offer it for customers on a stand-alone basis, who find its superior content offering to be something that they wish to have.”

AT&T’s WarnerMedia Entertainment is about to launch subscription service HBO Max in May, while just-released AT&T TV (formerly DirecTV Now) bowed March 2.

“We’re really pleased with what we saw [with AT&T TV] … that we would be able to replicate how customers were receiving the product in the other markets that we would enter where we own facilities and are able to pair video with broadband,” Stankey said.

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Regardless, at the time of the 2015 acquisition, AT&T U-verse and DirecTV had a combined 26 million customers in the United States and more than 19 million customers in Latin America, including Mexico and the Caribbean.

Flash-forward to the end of 2019 and AT&T had 19.5 million domestic pay-TV subscribers, with another 13.3 million in Latin America. That’s a decline of 25% and 30%, respectively.

Wall Street analyst Craig Moffett contends regulatory issues shouldn’t be a problem for DirecTV and Dish as they were in 2002 when the Justice Department sued to block a deal, saying the merger would stifle competition and hurt consumers.

“Satellite TV was growing by leaps and bounds at the time. Now it is in free fall. That alone may be enough to settle the debate; sure, two would be better than one, but both are credible bankruptcy risks on their own. Heck, they’d be a credible bankruptcy risk even together,” Moffett wrote in Sept. 30, 2019 note.

He contends a merger argument could best be presented to regulators as an act of preserving pay-TV for rural Americans without access to high-speed Internet.

“[That] would be a reasonably persuasive one,” Moffet wrote.