Comcast Corp 2026 Q3 Earnings Call

Thank you, operator, and welcome everyone. Joining us on today's call are Brian Roberts, Mike Cavanagh, Jason Armstrong, and Steve Croney. I will now refer you to slide 2 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 8-K 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.

Thanks, Marcy, and good morning, everyone. Let me start with an update on the separation of NBCUniversal and Sky. We are on track to complete the transaction by the middle of next year and are well into the execution phase, which includes building the standalone public company infrastructure. I'm pleased that Chris Halpin has joined us as NBCUniversal's CFO, as we announced earlier in the quarter. While there is still significant work ahead, we have a clear path to completion and remain focused on creating two companies with the strategic flexibility, financial strength, and leadership to compete and grow independently. We have tremendous confidence in the future of both companies. Each has significant structural advantages, a strong competitive position, and substantial opportunities for long-term growth and value creation. I want to spend a few minutes highlighting what gives us that confidence.

At Comcast, we have been operating in an intensely competitive environment for some time. Fixed wireless remains aggressive and continues to take share, while fiber construction remains elevated, with pockets of irrational pricing and promotional activity. While satellite is not yet a material factor, we recognize the importance of anticipating emerging forms of competition and positioning our business to respond as the market evolves. This quarter's financial results reflect the significant investments we're making to strengthen our competitive position, including fundamental changes to our pricing, packaging, and overall customer proposition. These investments are creating near-term financial pressure, but we believe they're necessary to strengthen customer relationships and position the business for return to growth over the long term. Importantly, we have a set of structural advantages that are difficult to replicate.

Our focus is on fully capitalizing on these strengths through better execution and improved customer experience and a more agile operating model. Our capital-efficient network is the foundation of our best-in-class Wi-Fi experience and the products and services we build around it. That leadership continues to be validated by independent third-party testing, with Xfinity ranked number one nationally for consistent quality, download speed, and video experience, and recognized for the most reliable Wi-Fi in our footprint. We're extending that leadership through network virtualization and upgrades to multi-gigabit symmetrical speeds, delivering even greater capacity, speed, and reliability at attractive economics. We're bringing the same commitment to excellence to the customer experience. The changes we've made are simplifying how customers interact with us and making it easier to do business with Comcast. We're seeing encouraging results, with NPS improving both sequentially and year-over-year.

As we build on this progress by delivering greater value and a more seamless experience, we believe we can better translate our product advantages into stronger customer loyalty and retention. Wireless gives us a powerful competitive advantage in a market substantially larger than broadband. We are the challenger with a capital-light model that avoids the spectrum and network costs of traditional wireless operators while leveraging our broadband and Wi-Fi leadership to deliver compelling value. With approximately 90% of Xfinity Mobile traffic traveling over Wi-Fi, we're able to leverage our existing infrastructure to deliver a great wireless product at highly attractive economics. Importantly, convergence also strengthens our core broadband business by deepening customer relationships, reducing churn, and increasing customer lifetime value. We're able to generate an attractive return across both businesses without meaningful incremental capital investment.

We believe we have the best hand in convergence, with significant opportunity to expand our position in wireless. In business services, we have built a highly profitable business generating nearly $6 billion annually in EBITDA, with substantial opportunity ahead, particularly in enterprise, where we're taking share in a market dominated by legacy providers by delivering more flexible, integrated solutions to increasingly complex customer needs. Our network and established small business presence provide a strong foundation, but our talented sales force is a real differentiator. Combined with our expanding portfolio of advanced networking, security, and managed solutions, we're deepening customer relationships, capturing more of their technology spending, and extending our reach well beyond our network footprint. We're already seeing the results with solid enterprise revenue growth and increasing adoption of advanced services.

These advantages alone aren't enough. The competitive environment demands that we execute at a higher level, move faster, and operate more efficiently. That's exactly where the team, working closely with Michael Angelakis as he prepares to become Comcast CEO next year, is focused. We're taking decisive steps to change how we operate, structurally improve our cost base, and create greater capacity to invest in growth. Building on the organizational changes Steve has made, including strategic external hires, we've embarked on the most significant operating and cost transformation in our company's history, with an opportunity we believe will ultimately amount to billions of dollars over time. This goes well beyond cost savings. We're challenging established ways of working and redesigning how we make decisions, allocate resources, and run the business to create a more agile, efficient organization that can compete more effectively and invest more decisively in growth.

Taken together, these advantages and the significant changes underway give us confidence in Comcast's ability to compete more effectively and create meaningful value for shareholders. Turning to content and experiences, we are equally confident in the future of NBCUniversal and Sky. We have an exceptional portfolio of businesses, a strong competitive position, and significant opportunities for long-term growth and value creation, and there are several reasons why we believe we are so well-positioned. First, we operate an integrated model across some of the most attractive and fastest-growing segments of media and entertainment. At the center are our industry-leading film and television studios, home to iconic franchises that fuel creativity and innovation across our businesses. We are also one of only two globally scaled theme park businesses, welcoming millions of guests annually and bringing our stories and franchises to life through immersive experiences.

Our media business, anchored by NBC and Peacock, reaches more than 100 million U.S. households each quarter, while Sky extends our scale internationally through a leading European media platform with deep direct-to-consumer relationships and premium sports, news, and entertainment offerings, further strengthened by the proposed acquisition of ITV. Finally, and importantly, we also have limited exposure to areas facing greater secular pressure, including linear pay TV networks. Second, we are a natural home to the world's best creators, talent, IP, and fandoms. We attract the world's leading creators and storytellers. Across film and television, we have built an extraordinary collection of enduring franchises from Jurassic, Despicable Me and Minions, Shrek, and Fast & Furious to Law & Order, One Chicago, Love Island, and Dateline.

This extends to live programming, where we have one of the strongest sports portfolios in the industry, including the NFL, NBA and WNBA, MLB, Big Ten, Olympics, and Premier League. Beyond sports, iconic live events such as Saturday Night Live, the Macy's Thanksgiving Day Parade, and Bravo's signature programming bring audiences together at scale. Creators, talent, and partners choose to work with us because they understand and value our ability to develop IP, build fandoms, and extend successful franchises across film, television, streaming, live programming, and theme parks. Third, our open architecture approach is a real competitive advantage. Fragmentation and diversity are the reality of the media and entertainment landscape, though one company can serve every consumer with everything. In that context, we believe being a closed shop or walled garden serves both the company and consumers poorly.

Our core strategy is to combine our exceptional content and distribution with select partners and third-party IP to reach audiences wherever they choose to engage. You can see this in our recently announced bundle with YouTube, which will expand Peacock's reach and accessibility while introducing our content and brands to a new and younger audience. It is also reflected in our theme park partnerships with franchises like Nintendo, Pokémon, and Harry Potter, where we bring some of the world's most beloved IP to life through immersive experiences. Finally, we intend to enter this next chapter with a strong investment-grade balance sheet, enabling continued investment in our brands, content, technology, and experiences while preserving the financial capacity to capitalize on future opportunities. Combined with our diversified revenue streams across advertising, subscriptions, licensing, and experiences, we believe we are positioned to drive long-term growth and value creation.

Now, reflecting on this quarter, in media, Peacock was profitable for the second consecutive quarter and ended the period with 48 million subscribers. We also delivered the highest-rated Spanish-language World Cup in U.S. history across Telemundo and Peacock. In Studios, Universal reached another significant milestone this quarter, becoming the first studio this year to surpass $5 billion at the global box office, led by an exceptional slate that included The Odyssey, which became the highest-grossing film in the studio's history. Finally, in Parks, we remain confident in the long-term outlook for this business. Our powerful IP, differentiated attractions, and world-class destinations position us well for long-term growth. While we continue to see near-term demand pressure across portions of the Parks business, including in Orlando and certain international markets, we view these trends as temporary rather than structural due to the confluence of a few factors.

In addition to the macroeconomic and geopolitical headwinds we have referenced in the past, we believe two other factors have contributed to this recent softness. First, we believe competitors were quicker to anticipate and recognize softness in demand and adapt their marketing strategies. Second, we continue to work through capacity challenges and ride throughput at Epic Universe, given the complexities of opening the most technologically advanced theme park ever built. We are taking action to address both of these challenges. Additionally, we are investing in our management team. Earlier this month, we announced a new Chief Brand and Commercial Officer, Luc Bondar, who joins from United Airlines and started this week, and we just announced that Randy Culbertson, who until recently served as NBCUniversal CFO, will also be joining Universal Destinations & Experiences as Chief Business Officer. The fundamentals of the business remain strong.