Comcast lost 477,000 cable-TV customers in Q2 amid 12% drop in revenue

Comcast’s Q2 subscriber loss followed a Q1 loss of 409,000 TV customers, for a total of 886,000 video customers lost in the first six months of 2020. By contrast, Comcast lost 733,000 video customers in all of 2019, an average of 183,000 per quarter.

While Comcast’s TV-customer losses accelerated this year, they’re still only about half as large as the customer losses reported by DirecTV owner AT&T. Comcast is down to 20.4 million TV customers, which is higher than any other cable or satellite TV provider.

Cable and satellite-TV subscriber numbers have been declining industry-wide for several years as people switch to streaming services that generally have lower prices, fewer hidden fees, and less onerous contract terms or no contracts. Live sports is the primary draw for many of the remaining cable customers, but there was less reason to pay cable companies for live sports when most major sports leagues were suspended. The resumption of live sports, albeit under precarious circumstances, should help cable companies somewhat.

Revenue and income drop

Company-wide, including NBCUniversal and other businesses, Comcast revenue was $23.7 billion in the quarter, down 11.7 percent year over year. Net income was $3.2 billion, down 12.2 percent. NBCUniversal theme-park revenue suffered a dramatic decline for obvious reasons, dropping from $1.47 billion in Q2 2019 to $87 million in Q2 2020.

Comcast’s cable-TV revenue in Q2 was $5.4 billion, down 3.2 percent year over year. The drop “reflect[s] a decrease in the number of residential video customers, partially offset by an increase in average rates,” Comcast said.

Broadband revenue was $5 billion, up 7.2 percent year over year, as Comcast added another 323,000 Internet subscribers in the quarter. Comcast, the nation’s largest Internet provider, has 29.4 million broadband customers, of which 27.2 million are residential. Broadband revenue “reflect[s] an increase in the number of residential high-speed internet customers and an increase in average rates,” Comcast said.

Comcast said its reported net gain of 323,000 broadband customers excludes over 600,000 “high-risk” and low-income customers receiving free Internet Essentials service.

Overall cable-division revenue (including Internet, video, home phone, mobile service, and advertising) was $14.4 billion, down just 0.2 percent year over year, and would have been higher if not for a 29.6-percent drop in advertising revenue and Comcast giving customers a few breaks on billing due to COVID-19. That included Comcast following the FCC’s “Keep Americans Connected” pledge by waiving late fees and not disconnecting customers who couldn’t pay because of the pandemic.

Sports-fee “adjustments”

Comcast said its cable revenue was reduced by “adjustments” to the Regional Sports Network (RSN) fees charged to subscribers due to canceled sporting events. The average price each TV customer pays Comcast “would have been higher if it were not for waived fees due to COVID-19 and the impacts of the customer RSN fee adjustments,” the company said. Comcast’s average monthly revenue per cable customer was $150.17, down from $156.71 three months earlier, partially reflecting an increase in the number of “one-product customers” such as those buying broadband but not TV or phone service.

Comcast also had lower costs for purchasing programming because of sports cancellations. “Total operating expenses benefited from adjustments for provisions in our programming distribution agreements with RSNs related to canceled sporting events as a result of COVID-19,” Comcast said. “Programming costs decreased 5.0 percent, primarily due to the adjustment provisions.”

Comcast owns eight RSNs itself, so the fee adjustments also lowered Comcast’s cable-network revenue. “Distribution revenue decreased 14.8 percent, reflecting credits accrued at some of our RSNs resulting from the reduced number of games planned by professional sports leagues due to COVID-19 and a decline in subscribers, partially offset by contractual rate increases,” Comcast said. Cable-network revenue decreased 14.7 percent to $2.5 billion in the second quarter.

Comcast recently launched the NBC Peacock streaming service and said today it has signed up 10 million users so far.