Comcast Corp - Class A (CMCSA) — Q1 2021 Earnings Call Transcript

Thank you, operator, and welcome, everyone. Joining me on this morning’s call are Brian Roberts, Mike Cavanagh, Dave Watson, Jeff Shell, and Dana Strong. Brian and Mike will make formal remarks, while Dave, Jeff, and Dana will also be available for Q&A. Let me now refer you to slide 2, which contains our safe harbor disclaimer, and remind you that 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 schedules for the reconciliations of these non-GAAP financial measures to GAAP. With that, let me turn the call over to Brian Roberts for his comments. Brian?

Thanks, Marci, and good morning, everyone. We certainly got off to a great start this year. Our entire company performed well, and we once again had particularly strong results at Cable, which posted its third consecutive quarter of double-digit EBITDA growth and ninth consecutive quarter of double-digit net cash flow growth. We added 461,000 broadband customers, which drove 380,000 customer relationship additions. This is the best first quarter on record. Our connect activity was healthy, and broadband churn improved for the 13th quarter in a row, hitting our lowest churn rate in our company’s history. I’m very proud of this quarter’s results and our long record of growth, which I believe is a direct result of disciplined investment, fantastic innovation, and consistent execution in a highly competitive market. This morning, I’d like to go a bit deeper into two areas; the robustness of our network in the U.S. and how we positioned ourselves to successfully compete against alternative providers and technologies. We’ve spent nearly $30 billion in the last decade, building an expansive fiber-dense network comprised of 191,000 route miles that carries an immense amount of traffic and has demonstrated extraordinary performance throughout the pandemic. Under Tony Werner, our retiring Chief Technology Officer, we have consistently engineered our network to anticipate change. And during his 15-plus years at Comcast, he has helped transform us into a product and technology innovator and leader. Tony, we thank you. He’s being succeeded by Charlie Herrin. Many of you on this call are familiar with Charlie. He helped develop game-changing products, including scaling X1 and most recently led a successful effort to redefine how we interact with customers, which has resulted in significantly higher NPS scores and lower operating costs. Charlie, Dave, and I have been fortunate to work together for 20 years. Under Dave and Tony, we’ve recruited the best engineering talent around the world and now are working as one global tech team to create platforms, apps, and experiences that evolve the way people connect and consume entertainment. We’ve done all this while keeping the network our number one priority. We’ve introduced the xFi Advanced Gateway, the most powerful of its kind. Our highest users are connecting a wide variety of devices in the home and streaming multiple services simultaneously over WiFi. Our xFi pods integrate with Xfinity Gateways to form a mesh network that maximizes WiFi coverage. All you do is plug one of these pods into an outlet to get great coverage in every room. We provide our customers with what they need, which goes well beyond extraordinary connectivity and speed. Xfinity is the only broadband provider to offer advanced security for monitoring devices inside and soon outside of the home. We also uniquely provide our customers with a whole home speed test and enable parents to manage internet time spent by streaming applications. This is all backed by a network that is built to consistently deliver the fastest speeds and outperform well into the future with two major initiatives underway. The first is virtualizing our network by leveraging artificial intelligence and machine learning. We’re taking functions that were once performed by thousands of large and expensive pieces of hardware and moving them into the cloud, which alone has reduced innovation cycles from years down to just months. We’re also automating many of our core network functions so that we can deliver instant capacity as well as identify and fix network issues before they ever affect a customer. Our second priority is further enhancing how we deliver our broadband product over our network. We currently offer downstream speeds of 1.2 gigs across our entire footprint using our DOCSIS 3.1 architecture and can increase upstream in a capital-efficient way. We’re making great progress to deliver multi-gig symmetrical speeds. And in the last six months, we completed two important milestones on our roadmap. In October, we conducted a successful live test of 1.25 gig symmetrical speeds. And earlier this month, our engineers completed the first-ever live lab test of DOCSIS 4.0, which establishes a foundation for us to deliver multi-gigabit speeds over our existing network without the need for massive digging and construction projects. Let me next talk about Xfinity Mobile, where we’re having great success. This past quarter, we reached breakeven on a standalone basis for the first time and added 278,000 mobile lines, the highest quarterly addition since launch. We just announced a new unlimited family plan, which can provide $600 in annual savings relative to other competitor family plans. Now, let’s turn to Sky, which despite renewed lockdowns in Europe, generated revenue growth and delivered the best first quarter customer relationships net addition in six years. I am particularly encouraged by our strong performance in the UK. Excluding pubs and clubs, which remain closed, UK direct-to-consumer revenue grew 8% over the first quarter 2020 and 11% relative to 2019. Churn continued to trend down. Two-thirds of our customer base in the UK now have Sky Q, we’re seeing great acceleration in mobile, and we just launched Sky Connect, our B2B broadband service that leverages the expertise of Comcast Cable. Dana Strong is off to a great start and is syncing up more than ever with Comcast Cable and NBCUniversal, so that together, we’re all innovating more quickly, better serving our customers and viewers, and increasing operating efficiencies. We’re also encouraged by the trends we’re seeing across NBCU. Our Parks segment broke even, excluding Beijing, for the second consecutive quarter driven by remarkable attendance at Universal Orlando. We can see firsthand pent-up demand for high-quality entertainment and family fun outside of the home, and we remain incredibly bullish on the Parks business. While Osaka recently had to close temporarily, Universal Studios Hollywood reopened on April 16th, the first time since the pandemic started. Our long-term excitement stems from the fact that we have a fabulous roadmap of new attractions and experiences awaiting guests as they safely return to our current parks. In NBCUniversal’s Media segment under Jeff Shell and Mark Lazarus, we’re starting to see the benefits of our new operating structure. Excluding Peacock, adjusted EBITDA increased 10% year-over-year. Our news content continues to experience tremendous momentum and distribution revenue is trending above expectations, a testament to the strength of our linear brands. We’re back in business on the studio side with more than 30 television series currently in production and we’re excited for our first big theatrical debut with Fast 9, launching in both the U.S. and China later in the second quarter. We’re also making great progress with Peacock, our premium ad-supported streaming service. Just one year post-launch, we have 42 million sign-ups. Monthly users of the service are consuming nearly 20% more programming hours each month than our traditional audience on NBC. And we just crossed 1 billion total hours watched, nearly double our plan when we launched. This strength in users and engagement has enabled us to create additional advertising inventory outside of our initial partnership, with CPMs at a material premium to linear prime time. Key to Peacock’s domestic success has been Xfinity with X1 and Flex driving subscriber acquisitions and healthy engagement. With Peacock, we’ve created great options for ourselves with several opportunities on the horizon. We’ve recently secured more original programming with creative partners like WWE and the NFL, providing a strong path to upsell into Peacock premium. And as Peacock gained scale in the U.S., we see compelling ways we can expand internationally. We’re looking to take advantage of the brand and scales of Sky across our European markets and potentially strike partnerships with local programmers and distributors in geographies where it makes sense. We plan to share more information on Peacock throughout this year. So, in summary, we’re all very proud and encouraged by our first quarter results. This performance is a testament to the resilience and evolution of our company. Excellent execution of our growth initiatives combined with tight cost control brings us one step closer to our balance sheet goals, and I am eager to see us return to our historical practice of repurchasing shares starting in the second half of this year. Lastly, I want to thank our team. Everyone across the company has continued to show up and innovate for our customers, audience, guests, and each other. We were recently named as one of the top five big companies to work for in the U.S. and one of the top 10 inclusive companies in the UK, a testament to the work and passion of our wonderful employees.

Thanks, Brian, and good morning, everyone. I’ll begin on slide 4 with our first quarter consolidated 2021 results. Revenue increased 2.2% to $27.2 billion. Adjusted EBITDA increased 3.5% to $8.4 billion. Adjusted EPS increased 7% to $0.76 per share. Finally, we generated $5.3 billion of free cash flow. Now, let’s turn to our business segment results starting with Cable Communications on slide 5. Cable revenue increased 5.9% to $15.8 billion. EBITDA increased 12% to $6.8 billion, and EBITDA less capital grew 16% to $5.1 billion. We added 380,000 net new customer relationships, up 2.4% over last year’s first quarter and up 27% over the first quarter of 2019. This was the best first quarter on record and was driven by broadband, where we added 461,000 net new residential and business customers, only slightly below last year’s first quarter and 23% above the first quarter of 2019. We saw healthy connect activity, and this quarter marked the lowest broadband churn in our history. This positive momentum has continued into the second quarter. From what we see today, we anticipate total broadband additions for the year to grow by mid-single-digit levels compared to 2019, which, aside from the extraordinary growth we had in an unusual 2020, was the best year in more than a decade. The strong customer additions, coupled with ARPU growth of 4.4%, drove a 12% increase in broadband revenue for the first quarter, the largest driver of overall cable revenue, and we expect this trend will continue. We also saw an acceleration in both, business and wireless. Business services revenue increased 6.1% and delivered 11,000 net new customer additions, primarily driven by continued improvement in small business. Wireless revenue grew 50% due to an increase in both customer lines and higher device sales. We added 278,000 net new lines in the quarter, the best results since launching this business in 2017, bringing us to 3.1 million total lines as of quarter end. Turning to video, revenue was consistent with the prior year, reflecting healthy ARPU growth of 6.8% offset by net video subscriber losses totaling 491,000, which we felt mostly on the connect side as residential churn improved year-over-year. We believe our residential rate adjustment at the beginning of the year was a significant contributor to both the ARPU increase and the video subscriber loss in the quarter, and we expect video losses in the second quarter will remain elevated. We currently anticipate Cable Communications revenue growth in the second quarter to accelerate by a few hundred basis points from the 5.9% we just reported, partly due to the comparison to last year’s second quarter, which was most significantly impacted by COVID-19, as well as our focus on driving growth in our connectivity businesses. Turning to expenses, Cable Communications first quarter expenses increased 1.5%. Programming expenses were up 5.5%, primarily due to the number of contract renewals that started to cycle through in 2020, combined with annual escalators in existing agreements. Looking to the second quarter, we expect programming expense growth to increase at low double-digit levels due to the continued impact of contract renewals as well as the comparison to last year’s second quarter, which was favorably impacted by adjustments accrued for customer RSN fees. For the full year, we continue to expect programming expense to increase at high single-digit levels. Non-programming expenses declined 1.1% on an absolute basis and 5.9% on a per relationship basis, while our customer relationships grew 5% year-over-year. Non-programming expenses should increase at high single-digit rates in the second quarter, partly due to the comparison to last year, which reflected the slowdown in business activity due to COVID-19, as well as our continued focus on driving growth in our core broadband and wireless businesses. Cable Communications EBITDA grew by 12%, with margins reaching 43.2%, reflecting 250 basis points of year-over-year improvement. These results include the important milestone of our wireless business reaching breakeven for the first time since launch. Cable capital expenditures increased 8%, resulting in CapEx intensity of 8.7%, up slightly compared to last year and driven by a 23% increase in scalable infrastructure as we continue to invest to enhance the capacity of our network. This spending was partially offset by lower customer premise equipment and support. Now, let’s turn to slide 6 for NBCUniversal. As you know, we recently issued an 8-K with updated trending schedules and a new reporting format that reflects the way the business is now managed. We moved Peacock, which was previously reported in our corporate results to NBCUniversal. And now we present NBCU in three business segments: Media, which combines our TV businesses and Peacock; Studios, which combines our film and television studio businesses; and Theme Parks. I will discuss today’s results in this new format. Let’s start with total NBCUniversal results. Revenue decreased 9.1% to $7 billion and EBITDA was down 12% to $1.5 billion. Media revenue increased 3.2%, driven by 9.1% growth in distribution revenue, which reflected higher rates post the successful completion of several carriage renewals at the end of 2020, partially offset by subscriber declines, which showed sequential improvement. Advertising revenue declined 3.4% as lower entertainment ratings and tough political comps were partially offset by more sports in the quarter, strength in news and the launch of Peacock. Media EBITDA declined 3.7% when including Peacock, which generated revenue of $91 million and an EBITDA loss of $277 million. Excluding Peacock, media EBITDA increased 10%, primarily driven by lower expenses, which was partly due to lower entertainment costs associated with fewer original hours aired and partly due to our new operating model. This year-over-year reduction more than offset higher sports cost, resulting from additional events. Looking to the second quarter, we expect healthy growth in distribution revenue to continue. We will have significantly more sporting events compared to last year, which should result in higher advertising revenue but also a significant increase in sports-related programming and production costs. Studio revenue was flat compared to last year, primarily reflecting higher content licensing revenue, offset by lower theatrical revenue. Content licensing revenue increased 14%, primarily due to licensing deals, including the office, which became exclusively available for streaming on Peacock this past January. Theatrical revenue decreased 88%, reflecting the deferral of theatrical releases due to COVID-19. Significantly fewer releases in the first quarter resulted in lower expenses, driving EBITDA growth of 66%. We’re excited to be releasing Fast 9 in theaters later in the second quarter, but we delayed the release of Minions 2 from July of this year to July of 2022, which will shift the profits from 2021 to 2022 as we continue to manage our film fleet to maximize value. Theme Parks revenue decreased 33.1% in the quarter and generated an EBITDA loss of $61 million, which included $100 million of Universal Beijing preopening costs. These results reflect Universal Orlando Resort operating at limited capacity, but trends remain encouraging as attendance continues to rebound, and we’ve been at or near capacity limits through spring break. Hollywood remained closed during the quarter, but we recently opened at a 25% capacity limit and expect this to move higher by June 15th. In Japan, we recently had to close our park temporarily due to rising COVID cases, but prior to this, we had seen strong demand. Looking ahead, we expect our EBITDA results to improve in the back half of the year as domestic attendance trends improve, and we remain on track to open our new park, Universal Beijing this summer.

Thanks, Mike. I’ll jump in on slide 7 for Sky, which I will speak to on a constant currency basis. For the first quarter, Sky revenue increased 2% to $5 billion, largely reflecting healthy growth in our UK business. Direct-to-consumer revenue increased 1.8% with growth in the UK even stronger. This result was driven by higher average rates per customer and strong customer growth across all markets. We generated 221,000 net customer additions, the best first quarter in six years, driven by streaming across our markets as well as steady momentum in mobile and broadband within the UK. Advertising revenue increased 3.4% as we continue to outperform the market, particularly in the UK, where the ad market is rebounding more quickly than we expected, and we are driving growth through advanced advertising. Sky generated $364 million in EBITDA in the first quarter. As expected, this reflects elevated expenses, including higher sports rights amortization, resulting from more events in the current quarter as well as higher expenses associated with successfully growing our mobile and broadband businesses and investment in key growth initiatives, which now include Sky Connect, our recently launched commercial broadband business in the UK. For the second quarter, we expect revenue growth to accelerate to low double-digit levels on a constant currency basis due to the comparison to last year’s second quarter, which was the most impacted by COVID-19, as well as continued strength in our UK business. We also anticipate significantly higher sports rights amortization compared to last year when events were paused. As a result, we expect to generate a similar level of EBITDA in the second quarter as we did in the first quarter. We were recently outbid for some of the broadcast rights for Serie A in Italy as we stood firm and our disciplined approach to sports-related costs. We believe this was the right long-term financial decision, but we expect a reduction in programming and production expenses and a potential decline in customer relationships in Italy as a result. We continue to expect Sky EBITDA in the second half of this year to accelerate from first half levels, reflecting the benefits of a reset to major sports rights as well as a more efficient operating structure.

Now, let me wrap up with free cash flow and capital allocation. Free cash flow was $5.3 billion in the quarter, an increase of roughly 60% year-over-year, primarily due to an improvement in net working capital and higher EBITDA. Net working capital will continue to fluctuate on a quarterly basis, and we still expect the full year drag to increase relative to 2019 due to an increase in content investments, our broadcast of the Olympics, and the reversal of COVID-related one-time tax deferrals. Consolidated total capital, which includes capital expenditures as well as software and intangibles, decreased 1.1% in the first quarter to $2.5 billion, reflecting a decline at NBCU, which was partially offset by increases at Sky and Cable. We ended the first quarter with $104 billion of debt with a weighted average cost of 3.6% and a weighted average life of 14.5 years and net debt of $86 billion for a net debt-to-EBITDA ratio of 2.7 times. Throughout the pandemic, we have maintained an elevated cash balance to fortify our liquidity position, and we ended the first quarter with $15 billion of cash and cash equivalents. We expect to gradually reduce our cash position by deploying excess cash towards debt reduction throughout the remainder of the year as our business operations continue to recover. Finally, we remain committed to our longstanding balanced approach to capital allocation, which consists of maintaining a strong balance sheet, investing organically for profitable growth, and returning capital to shareholders for a strong commitment to our recurring dividends and our expected return to share repurchases in the second half of this year. Thanks for joining us on the call this morning. I’ll turn it back to Marci, who will lead the question-and-answer portion of the call.

Thanks, Mike. Regina, let’s open the call for questions, please.

Thank you. Good morning. The company is clearly on an upswing as we move out of COVID, and the leverage in the business is evident in the first quarter numbers. I have a broad-based question that encompasses all divisions. In Cable, it appears they are starting to focus on advanced advertising. We're still seeing strength in broadband, and the price decrease in mobile should drive market share. In NBCU, which looks like the division with the most potential coming out of COVID, I'm uncertain if this will be the peak year for losses with Peacock, but Theme Parks seem to be on a five-year growth trend, and advertising and production are rebounding. In Sky, the leverage is noticeable. So, my question is, where do you see the most leverage across each of the businesses? Are margins and free cash flow likely to continue improving?

Well, thank you, Jessica, for those comments. Why don’t we just go around the horn, and why don’t we just go from Dave to Dana to Jeff, and everybody give a crack at their view of the business and a chance for them to introduce themselves on the call here.

Thank you, Jessica. This is Dave. Our focus continues to be on maintaining momentum in the connectivity side of the business. Broadband, both residential and commercial, is incredibly important and a significant growth engine for us. We will keep enhancing broadband by increasing speed, control, coverage, and now, streaming, along with mobile. We aim to accelerate mobile while complementing broadband with these products. That’s our strategy, and it remains unchanged. Regarding EBITDA, we appreciate the recurring revenue aspect of the connectivity business and the margins it provides. We are committed to reducing transactions that lead to customer dissatisfaction, focusing on digital solutions and items like self-install kits. Everything we have been discussing will continue. I feel very positive about our position in the marketplace, with considerable potential left in broadband, and I am optimistic about mobile and business services.

Thanks, Jessica. This is Dana, following up from Dave’s side. From the Sky perspective, we are very pleased with the fundamentals of the business. Our Q1 results demonstrate our strong position, with increased subscriber numbers, reduced churn, and rising revenue. All fundamental factors suggest we are well-positioned to move past COVID. Specifically regarding leverage, I believe the UK is in an exceptional growth position. We have a diverse revenue base, with direct-to-home having its best performance in six years, streaming performing well, mobile thriving, and broadband showing growth along with significant innovation potential. Therefore, we see a lot of growth opportunities in the UK and a solid foundation to expand the rest of the portfolio.

Hi, Jessica, this is Jeff. And everybody. So, there are a lot of different places I could pick and choose from NBCUniversal, but let me just talk about two points of leverage that I’m excited about. I think, first of all, as we’ve talked about in previous calls, we really adjusted our cost base across the entire Company during the pandemic. We didn’t do this just to cut costs. We obviously looked at where the business was going and changed our organization, particularly on the TV side, but I’m excited about the business being kind of adjusting to the new cost base, and as we grow revenue, that’s going to help. And then, the obvious other one that really was affected and has been affected during the pandemic is our Parks business, which normally is a really, really great business. But obviously, during a pandemic when you close, it’s not a good business. It’s going to be choppy getting open again as things surge and come back and so forth, but it’s hard not to get excited about our Parks business. So, the demand is there. We’re seeing it in Orlando. We have no international travel yet, which is a significant part of the business, and we still are hitting the capacity limits we’ve set for ourselves based on safety protocols every day. Just reopened Hollywood and we’re seeing the same thing in Hollywood. Japan is obviously going back and forth, but we’re excited long-term about that park and then Beijing coming. And the other thing that’s happened during the pandemic is we’ve continued to build attractions. So, we are hitting the front of the market with some pretty exciting attractions in each of our parks. We have Nintendo, which we think is one of the great attractions that we’ve ever built in Japan and in Beijing as well. We have out in Los Angeles, our new pets attraction, we’re getting stellar reviews and people love it. And then, most excitingly to me, we have a new roller coaster in Orlando called the VelociCoaster and Jurassic roller coaster, which I rode a couple of weeks ago. It is both spectacular and petrifying. I think when we open that to the public in June, it’s going to be another driver for our business. So, I’m very excited about the Parks business. It’s the one business that’s going to come back really strongly from the depth of the pandemic.

And maybe it’s Mike. I’ll just jump in and put it all together because I think the ultimate question was what happens with free cash flow over time and our confidence. As we’ve been saying for a couple of years before COVID, during my tenure, we’ve been investing in our businesses. We love them and we’ve been investing so they remain relevant and strong for the future. While free cash flow can be inconsistent at different times, we are confident that we will grow free cash flow over the years ahead on a multiyear basis. COVID disrupted that story, but as you remember, that’s how we felt before COVID, and I still feel that way now. As everyone mentioned, I think we see the light at the end of the tunnel regarding COVID. All the earnings potential of our businesses that we believed in before COVID, I think these results indicate that they are still there and maybe even more so.

I guess, maybe there are two quick ones. But Dave, on your side, the new wireless pricing, does that suggest another investment round in wireless, or would you just look at that as consistent with the focus on trying to drive share there? Ultimately, what’s the wireless strategy? And what are you hoping the new pricing levels to accomplish? And Jeff, just path for Peacock monetization with engagement coming in double expectations, my guess is, you haven’t seen much difference relative to your revenue expectations because of limits on advertising. Can you just remind us when does that advertising inventory get opened up to new advertisers? And how will Peacock monetization progress from here? Thank you.

Doug, this is Dave. I'll begin. Our wireless strategy has remained consistent. The new unlimited plans provide us with an opportunity to enhance our value proposition while still offering by the gig. Introducing unlimited will not cause a significant shift in our investment; there will be some changes, but they won't be substantial. It's a valuable addition to our portfolio, and we felt it was important to accelerate its rollout. We believe it benefits broadband and is contributing positively as we see the effects on churn. It's a growth driver for us. We're very pleased with the 278,000 new lines, marking the highest number of additions in a quarter since our launch. This contributed to a 50% revenue growth and achieved profitability. We are focused on all the initiatives we set out to accomplish, and this is just one aspect of that effort. You will likely see more packages combining broadband and mobile, but that's consistent with our previous discussions. It's still early days for the unlimited plans, but we are optimistic about their potential. We value the full range of products we offer in the market.

Doug, this is Jeff. Let me just take the opportunity with your question to maybe spend a minute or two on Peacock and just provide a little bit more granularity and how we’re doing more broadly than your question. First of all, we are very pleased with our steady growth on Peacock, and we’re particularly pleased that we chose this business model, which is an ad-supported AVOD model for the business. It was the right decision to pursue that clearly for our company. Our revenue in that model is a mix of both, subscription revenue and ad revenue. If you break down what drives the ad revenue in the future, it’s really four things we track. First thing is sign-ups. I think, Brian mentioned in his opening that we reached 42 million sign-ups. This is up 9 million from last quarter. We’re pleased not just with that growth but with a steady growth in that over time as we’ve added things. The second metric is how many of those people who sign up use the service on a regular basis. We internally use a metric known as MAAs, which I think others in the industry also use; monthly active accounts—that’s how many households actually use it monthly. By that basis, roughly a third of our sign-ups are by our metrics MAAs. Put that in context: that is about a third of where Hulu is today. We’ve only been national for less than a year, Hulu’s been 13 years. We’re pleased with how that’s grown steadily. MAA is the way we track that actually kind of understate the engagement because there are many people who use it, but just not enough to be an MAA. If you made it quarterly assumption, then we’d be up to another $10 million above that number. The third metric is usage, which is very strong, double our projections. Put that in context: an average Peacock MAA is using Peacock more than an average TV viewer is watching NBC. We’re pleased with that. Finally, how do we monetize those users and usage is the CPM, which gets to your question. We set out, as you mentioned, in the sponsorship model. The vast majority of our revenue coming out was set up by 10 charter advertisers. We exceed the guarantees that we made to those advertisers. We are already, even this quarter, selling some of the excess inventory on a spot basis, achieving CPMs that are equal or in some cases, above what we get on NBC Prime, which is our gold standard. To answer your question, in Q4 of this year, that’s when the sponsorship deals roll off, and we start selling all of our inventory on a spot basis, but we’re in early stages of the upfront right now. We’re already starting to talk to advertisers about making upfront commitments that include Peacock. Let me mention one other thing: all of this success is without most of the programming that we anticipated. We anticipated launching with the Olympics. We have not had—we have two Olympics in the next seven months. We’re going to do some pretty exciting things on Peacock with our Olympics programming. Even though we’re back in production, we have 30 shows right now, most of those have not hit Peacock yet. The strength of our original programming that we have planned to launch is really coming in future quarters. We’re confident about the future of Peacock.

One on Cable, one on Sky. Maybe for Dave, or Dave and Brian. Thank you for the comments in the prepared remarks on the network. As you know, there’s a lot of focus on symmetric offers, particularly in Washington. I’m just wondering, from a business point of view, do you think there’s real demand there? And what kind of timeline should we be thinking about in terms of adding that capability or more of that capability to your network? And can you talk a little bit about what that might mean for capital intensity, which I’m sure is what most investors are focused on. For Dana, there’s been an unbelievable amount of kind of tectonic shifts in the European sports landscape just this year. You mentioned Sky; you have Serie A. Can you just put all this in context, when you look at the Bundesliga deal, what we’re reading about with EPL, Serie A? Is this helpful to Sky hitting its EBITDA targets of doubling over time, or is this a headwind? Could you just talk a little bit about the soccer background? That would be great for all of us. Thank you.

Dave, why don’t you talk a little bit about symmetrical?

Sure. Hi, Ben. This is a focus for us over the next several years. Our approach, our strategy is to continue to enhance broadband completely. You want to have the best speeds in the marketplace that go from the house to the business, great WiFi coverage where people are, control streaming, and now mobile is part of the overall solution, making it all seamless. It’s the overall experience that we’re focusing on. We continue to improve speeds, and we’ve got 20 years in a row of constant increases in terms of speeds. We address both downstream and upstream. Putting usage in perspective: upstream is less than a tenth of downstream. So, name the application; our network really stood up, as Brian talked about earlier. While our competitors are spending heavily to try to catch up to us, they've tested; we’ve done 2 gigabits of download speed for testing, symmetrical 1 gig. We have an architecture that I think is going to continue to put us in position to do it efficiently. As we sit here, we have 1.2 gigabits deployed throughout our footprint. We’ve increased upstream speed, and over time, I think we can address symmetrical issues; in the near to midterm, we are in a good position. I do not see an incremental need for upgrade in terms of capital. We constantly invest in the network. We’re making our infrastructure more efficient, virtualizing things, taking cost out of how we deliver this. Broadband, commercial, and residential is growing; it’s a great business. We’ll continue to strengthen our lead position, and it will continue to be a great return on investment for us. Our CapEx intensity might be a little higher one year versus another, but we’re still going to be in the ballpark of what we’ve been doing. I feel very good about our position and really like our long-term roadmap.

Ben, this is Dana. Good morning, and thanks for your question. There has certainly been a lot of noise around sport and football in Europe over the past few weeks. If you put it in context, I would say that Sky has had a very good track record of renewing sports rights, and we’re feeling good that that track record will continue. With the English Premier League at the last renewal, we made a deliberate choice to reduce our investment by 15%, but we still secured an improved set of rights. In Bundesliga, for the upcoming season, we continue to hold all of the rights to the very best games, but we weren’t able to secure a discount to our previous contract. With Serie A, I think it just demonstrates that we will walk away when we feel the economics don’t work. The core of your question is to remain confident in our ambition to double the EBITDA over the next several years. I would say yes, we do remain confident in that ambition based on confidence in a range of factors. Strong bounce back coming after COVID, our ability to continue to use the retail engine to drive the customer base, and reduce churn through aggregation, our strategy for multiservice bundles, a very good disciplined cost focus. We’re executing very well. Secure content supply and really diversifying that to our expansion into originals and exclusives has worked very well. We still see a lot of strength in UK growth opportunities. All of that gives me a lot of confidence to say we’re on track for our ambition of doubling EBITDA over the next few years.

Hey, guys. Thanks. I guess a couple of follow-ups here. Brian, as Ben said, thanks for the detail on broadband, and clearly, it’s not just about speed. It’s interesting that when the market is worried about competition, you guys are raising the bar on yourself for ads. What’s the mix of drivers that you see between strong market growth and share shifting? And then second, on mobile, it looks like you’re hiring a lot of people in that business, probably getting ready for a network build. Can you expand on where that network effort is headed? Thanks.

Let me start. Dave, please feel free to jump in. I believe Dave provided thorough answers regarding broadband. We truly believe that having the best product puts us in a strong position. We understand how to compete, focusing on market share while also increasing EBITDA and free cash flow from the business. We have concentrated on the business sector, which has seen significant momentum as companies reopen. Regarding wireless, I want to support the points Dave made about our mobile focus; we will be conducting trials to explore ways to optimize costs. If successful, this will be particularly effective in densely populated areas, requiring a strong partnership with a wireless MNO. We are pleased with our collaboration with Verizon, and I commend our team and Verizon's team for delivering excellent offerings to the market with expanding mobile services. Overall, these two products are crucial for us, and by bundling them together, we are positioned to continue growing and effectively competing as the market evolves.

Yes, I have a question for Dave, two actually. First, can you discuss how your Cable segment is preparing for federal stimulus and the potential impact on your business? Can you provide any estimates on what you expect from the stimulus, including the number of essential customers you have and whether you anticipate those customers will generate higher average revenue per user under the stimulus plan? Secondly, regarding the wireless business, I want to clarify a question that was previously asked. With the new pricing structure, do you believe you can still maintain positive EBITDA in that segment, even if it results in a lower average revenue per user going forward?

Thank you, Craig. So, first on stimulus, there probably will be some non-pay benefit. Churn has been running lower for the past year. Our earlier churn performance was regardless of stimulus checks. I think there could be just a little support, but again, we’re already doing fairly well there. In regards to the wireless, yes. The way we think about this, it’s a long-term growth opportunity. When you look at the overall marketplace, we feel good about that we’re - we have over 3 million lines, low penetration, lots of runway. So, we take a disciplined approach towards packaging and improving value. Yes, we feel very good about unlimited as part of the portfolio. It should not change materially the results in terms of ARPU and mobile and the impact towards EBITDA. Overall, just really appreciate the Verizon relationship, it’s important for us, and good for them. So, it’s a good win-win for us to be able to add this new set of unlimited to an already strong portfolio. We feel good about driving healthy EBITDA.

A couple of follow-ups for Jeff. Jeff, lots of news in terms of sports rights in the U.S. as well, with you guys adding WWE and the NFL deal and not renewing NHL and the shutdown of the NBC Sports net. Can you talk about your strategy going forward? And maybe what were some of the drivers of those decisions? Also back to Peacock, the big B2C platforms are obviously spending sort of multiples of what Peacock is on content. Should we expect the strategy to evolve over time with potentially further investment to capture growth and engagement, or do you guys think you guys are fully capturing the opportunity at current levels? Thanks.

Yes. Thanks, John. Let me take them in order. We’re thrilled to continue our NFL relationship, which was an important one for us. The NFL encompasses what we want in sports rights, important for our traditional business, number one show in prime time for over a decade. It is a very important tent-pole for our existing business. As the business evolves and moves to streaming and on demand, that deal also gave us a lot of content that we can use on Peacock and our other platforms, whether it’s simulcast of games and exclusive games or additional rights to show highlights and other footage. It’s really the perfect deal for us. The Olympics is the same thing where we have rights to use content across multiple platforms; same thing with golf, which is an important tent-pole for us. We’ll continue to be aggressive and look for sports that not only we can get for a price we think we can get a return on but also properties where we can drive usage, linear and digital. WWE is kind of the perfect example for that, where we extended a franchise that was already important to us on USA and our linear networks and extended across in Peacock in a successful way. We’re thrilled with our portfolio now. We’ll continue to be opportunistic in seeking opportunities that match these criteria. Regarding Peacock spending, it’s important to recognize that we really have our spending should be looked at in context, not just what’s being discreetly spent on Peacock, but across our whole portfolio. When you look at that, we think we match up pretty well versus our competitors. We actually don’t have the benefit of most of the spending that we had planned because of the production delays with COVID. We’re pretty pleased with the content we have on Peacock and the content that’s coming in future days. We have a lot of options going forward, and we’ll continue to watch how the market evolves and how our product evolves, and we’ll evaluate those options.

Thanks, John. Regina, we have time for one last question.

I was curious if you could share how much of the programming spend within NBCU is exclusive to your platform, whether created by the studio, live sports, news? Where do you see that mix going over the next few years, especially as you look to expand the reach of the Peacock platform?

Yes. Thanks. I would say virtually all of our programming, the vast majority of our programming is exclusive. The exclusivity of programming is very, very important to us. It’s not just the traditional exclusivity, whether it’s SNL or a drama, but it’s the exclusivity of a Rachel Maddow every night on MSNBC or exclusivity of our various sports properties, most notably the Olympics. So, exclusivity is critical when you look at programming, not just in NBC, but across some of the new digital platforms too. I don’t know if that answers your question, but virtually all of our programming.

Thanks, Mike. I just want to thank all of you for joining us on our first quarter 2021 earnings call. We hope you all continue to stay healthy and safe.