What's going on?
Comcast, the massive American media company (and owner of TV station NBC), posted better than expected fourth quarter revenue thanks to strong subscriber growth and improved customer service (which helped retain customers). Revenue rose to $19.25 billion for the quarter, surpassing the expectation of investors.
What does this mean?
Comcast is bucking the cord-cutting trend. While many in the industry assumed that streaming services like Netflix and Hulu would be a death-knell to cable TV providers, Comcast added 89,000 cable subscribers this past quarter. That’s the most in any quarter over the past eight years, and more than four times the amount investors were expecting. The company has been improving customer service and slimming down channel bundles in order to retain and grow their subscriber base. And its high-speed internet business, the biggest one in America, added almost half a million customers.
Why should I care?
Bigger picture: It’s really simple economics for Comcast. Subscribers are spending more money with Comcast and there’s more of them: that means more revenue. The company said the average monthly bill rose 3.5% to $144.90 as more customers signed up for high-speed internet access. Comcast’s gain may be coming at the expense of rivals such as Verizon and AT&T who saw its subscriber growth slow.
For the stock: Shares of Comcast rose 6% on the news. Investors like it when companies grow and Comcast’s revenue was 8.5% higher in 2015’s fourth quarter versus the same period in 2014. The fact that it added so many subscribers suggests, perhaps, that streaming services do not represent the end of cable TV – at least not for now. Comcast also increased its dividend and the amount of stock that it is buying back (both are standard ways to return money to shareholders) – and such things are, usually, positive for a stock.