What happened
Hoping Comcast's internet slump was easing? Not yet. Chief Financial Officer Jason Armstrong told investors at a Goldman Sachs conference that broadband subscriber losses are not abating this quarter. Comcast finished down 6.6% at $24.59. Charter Communications, facing the same pricing heat, fell 8.1%.
The price war that is squeezing margins
Armstrong said competitors are advertising broadband at around $30 to $40 a month for service rated at 1 gigabyte a second. "That, to us, is not a rational price point," he said, noting those offers make investment returns hard to pencil out. The deal parade is long: Charter's Spectrum has a one-gigabit home offer at $60 a month for a year.
Optimum Communications Inc. promotes a one-gig fiber service for $25 a month. Verizon has Fios at $30 a month, while customers pay $80 to actually reach gigabit speeds. Comcast is marketing Xfinity gigabit at $50 per month.
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It was very competitive in Q2.
What to expect in the numbers
Bloomberg Intelligence says the quarter's broadband results likely hew closer to last quarter's loss of 167,000 customers than to the 103,000 decline analysts had penciled in. Comcast, based in Philadelphia, also recently laid out a plan to carve its connectivity operations apart from its media assets, and it continues to contend with ongoing erosion in cable TV and home internet.
Theme parks and the money angle
On theme parks, Armstrong said the "softness in Orlando" the company described last quarter is continuing, pointing to equal measures of macro factors, gas prices, and airfare weighing on the market. For your wallet, here is the through line: cheaper gig-speed deals are pulling customers to rivals, pressuring cable profits and keeping internet subscriber trends choppy in the near term, even as Comcast points to only modest improvement in profitability and a better full-year broadband trend.
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