Comcast Tops Forecasts but Broadband Losses Deepen
Comcast beat market forecasts for revenue and profit in the third quarter, but losses of broadband subscribers accelerated in its core business, Reuters, the Wall Street Journal and Barron’s reported Oct. 22.
Third-quarter revenue was $29.3 billion, slightly above the $29.2 billion market forecast. The 6.1% decline from a year earlier is misleading: it reflects the spinoff of the cable networks unit Versant early this year and the sale of the Sky business in Germany. Excluding both deals, revenue rose 0.5% on a pro forma basis.
Adjusted earnings per share were $1.07, well above forecasts of $0.98 to $0.99. Adjusted earnings before interest, taxes, depreciation and amortization were $9.11 billion, above the $8.88 billion forecast, and free cash flow of $4.2 billion beat market expectations of $3.2 billion. Earnings per share on a generally accepted accounting basis were $0.97, up 7.2% from a year earlier.
In broadband, there was no good news. Comcast lost 144,000 U.S. residential broadband subscribers in the quarter, more than the roughly 131,000 analysts polled by FactSet had expected and well above the 91,000 lost a year earlier. The subscriber drain is deepening, not easing.
Chief Financial Officer Jason Armstrong had already warned at a September conference that the third-quarter broadband decline would not improve on the year. He had forecast that broadband average revenue per user would recover sequentially, and the rate of decline did narrow to 2.9% from 3.8% in the prior quarter. But it did not stop the subscriber losses.
Competition remains unforgiving. Reuters reported that aggressive price cuts by AT&T and smaller fiber operators are making it harder for Comcast to hold subscribers. U.S. residential video subscribers fell by 274,000, while wireless lines grew by a net 368,000 to 10.6 million, below analysts’ forecast of 408,000.
Streaming service Peacock, meanwhile, posted its second consecutive profitable quarter. Adjusted EBITDA was $261 million, a sharp turnaround from a $217 million loss a year earlier. Paid subscribers reached 48 million, up 17% from a year earlier, and revenue rose 33% to $1.82 billion. Media revenue rose 13% to $5.36 billion, helped by World Cup coverage and Love Island USA.
The film business also performed well. The Odyssey, released in July, earned $1.8 billion worldwide, becoming the highest-grossing film in Universal Pictures history, and studio EBITDA rose 18.6% to $402 million. Universal became the first studio to pass $5 billion at the global box office in 2026.
Theme parks disappointed. Revenue fell 4.4% to $2.6 billion, below the $2.71 billion forecast, and EBITDA fell 17.1% to $780 million, on weaker Orlando demand, fewer Chinese tourists visiting Japan amid geopolitical tensions and a strong year-earlier comparison from the Epic Universe opening.
Business connectivity revenue rose a solid 2.7% to $2.64 billion. Comcast paid $1.2 billion in dividends and said it would suspend share buybacks from the third quarter while it splits into two independent listed companies. Reuters reported that media assets including the studios, theme parks and Peacock are to be separated by mid-2027. Bloomberg reported that Comcast is preparing large job cuts as part of a restructuring of its connectivity business.
The market could not settle on the mixed signals. Barron’s reported that broadband losses overshadowed the earnings beat. Comcast shares rose nearly 2% immediately after the announcement, then turned 1% lower in premarket trading. The stock opened at $21.90 on Tuesday, Oct. 20, and has traded between $20.48 and $32.85 over 52 weeks, down about 26% this year.
