Comcast Corp - Class A (CMCSA) — Q3 2024 Earnings Call Transcript

Thank you, operator, and welcome, everyone. Joining us on today's call are Brian Roberts, Mike Cavanagh, Jason Armstrong, and Dave Watson. I will now refer you to Slide 2 of the presentation accompanying this call, which can also be found on our Investor Relations website and which contains our safe harbor disclaimer. 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 schedule issued earlier this morning for the reconciliations of these non-GAAP financial measures to GAAP. With that, I'll turn the call over to Mike.

Thanks, Marci, and good morning. Before I hand it over to Jason, I'll touch on a few topics that are top of mind for me as we report our third quarter results and head into the home stretch of 2024. First is convergence, second is Epic Universe and third is Media. On convergence, which we define as the combination of ubiquitous high-speed Internet along with wireless phone, by that definition, we are positioned to win. And that is because, today, we have 63 million homes and businesses already able to receive gig-plus broadband speed and we also offer wireless service everywhere we provide broadband. This reach far exceeds the fiber footprints of the largest three telecom companies combined, and our footprint is growing at a rapid pace. In fact, we've extended our network to more than 1.2 million additional homes and businesses over the last 12 months, a 50%-plus increase over what we were able to do just two years ago. So, even accounting for the announced fiber buildout plans of those three wireless companies, we expect to maintain this lead well into the future. Broadband usage is skyrocketing. Our broadband-only customers are heavy data users, averaging 700 gigabytes per month. And we want it that way because our existing network can handle significant increases in bandwidth consumption at a very low marginal cost. In addition, we're on a path over the next few years to being able to deliver multi-gigabit symmetrical speeds, which will be competitive with any technology out there. The other side of our converged offering is Xfinity Mobile, which matches the capabilities of any wireless network in America. We bundle Xfinity Mobile with our best-in-class broadband service everywhere we compete at a price that offers great savings to the consumer. And when combined with broadband, our wireless offering both improves churn and increases overall customer satisfaction. We also look for opportunities to enhance our converged experience. An example being a new feature we are rolling out now called WiFi Boost, which automatically increases Xfinity Mobile customer speeds up to 1 gig on our WiFi network, which is also the largest in the nation. To close out these comments on convergence, it's important to note that our strategy is proving out in financial performance. Our domestic broadband plus wireless revenue has been growing at 5%, which consistently leads the industry when you look across our competitors. The second topic I want to touch on is Epic Universe, which will be the most groundbreaking park ever introduced in the United States. We recently announced that Epic will open on May 22, 2025, and have also started to activate our sales and marketing plans, including the sale of vacation packages that provide the opportunity to visit Epic, which we expect to be in very high demand. This park will offer a level of immersion that is unmatched, transporting guests to expansive worlds featuring more than 50 awe-inspiring attractions, entertainment, dining and shopping experiences. Once Epic opens, Universal Orlando will be transformed into a week's long vacation, offering four theme parks, a CityWalk dining, retail and entertainment district and 11 hotels. Epic will build on everything we've excelled at in the present and in the past and make it even better by infusing iconic storytelling with cutting-edge technology in five fully-themed worlds. Each one telling a fantastic story based on world-renowned movies and literature such as Dark Universe, which capitalizes on our Universal Monster franchise; Isle of Berk, which brings DreamWorks' How to Train Your Dragon to life; there is The Wizarding World of Harry Potter - Ministry of Magic; as well as Super Nintendo World, and all of these are connected by Celestial Park, a world in and of itself. We could not be more excited for what's ahead of us with Epic and our entire Destinations & Experiences business. Finally, let me talk about Media, where the truly outstanding and universally praised production of the Paris Olympics demonstrated the power of NBC broadcast and Peacock. We brought new relevance and excitement to the Olympics by flawlessly presenting the biggest and most complex Olympic Games in history, dominating television, streaming, news and social media for 17 straight days. Daily viewership averaged over 30 million across our platforms, an increase of 80% compared to the prior Summer Olympics in 2021, and Peacock streamed 23.5 billion minutes, up 40% from all prior Summer and Winter Olympics combined. All of this leading to a record high $1.9 billion of incremental Olympics revenue in our Media segment this third quarter. We achieved this result by leaning in with the full symphony of Comcast, NBCUniversal playing together and a big bet on new ideas and innovation that paid off. We are all very grateful to our NBC Sports team and look forward to them bringing the lessons learned and momentum to our entire sports portfolio, especially as we begin to prepare for the relaunch of our partnership with the NBA starting with the 2025-2026 season. The regular and post-season NBA games across both NBC and Peacock, in addition to a number of exclusive Peacock games, will bring in broad and diverse audiences, allowing us to also create new entertainment content that will work beyond the basketball season with exciting opportunities for companion programming and marketing collaborations that tap into the NBA's pop-culture appeal. Before I hand it over to Jason, let me talk about our recent execution against an outlook for our capital allocation priorities, which are threefold: to maintain a very strong balance sheet, which we feel great about given the industry-low leverage we maintain; to return significant capital to our shareholders, which we have done consistently since we reinstated our buyback program in May 2021 and have since returned $50 billion of capital, equaling 100% of our free cash flow and reducing our share count by 20%; and third, to invest in our growth businesses both organically and inorganically. Organically, we've invested heavily in our growth businesses, including the upgrade of our broadband network to ubiquitous 1-gig speeds and counting, the incubation, launch and success of our wireless and business services units, the investment in Peacock and our studios, and the creation of the Epic Universe theme park to name just a few. And while we remain most focused on driving our growth businesses, we also look to maximize the significant legacy value in our portfolio of more mature businesses. As you know, we chose not to participate in the M&A process around Paramount in the earlier part of this year, but we would consider partnerships in streaming despite their complexities. And like many of our peers in media, we are experiencing the effects of the transition in our video businesses and have been studying the best path forward for these assets. To that end, we are now exploring whether creating a new well-capitalized company, owned by our shareholders and comprised of our strong portfolio of cable networks, would position them to take advantage of opportunities in the changing media landscape and create value for our shareholders. We are not ready to talk about any specifics yet, but we'll be back to you as and when we reach firm conclusions. And to sum it up, we are very proud of the job we've done on the capital allocation front over the past few years and we are highly motivated to maintain the same level of discipline. With that, it's over to you Jason.

Thanks, Mike, and good morning, everybody. I'll start with our consolidated results on Slide 3. Total revenue increased 6.5% to $32.1 billion, benefiting from NBCUniversal's highly successful airing of the Paris Olympics. Excluding the Olympics, our revenue was relatively flat year-over-year. Our six major growth drivers, including residential broadband, wireless, business services connectivity, theme parks, streaming and premium content in our studios, generated nearly $18 billion in revenue, well over half of our total company revenue and grew 9% in the quarter and at a mid-single-digit rate over the past 12 months. Total EBITDA decreased 2% to $9.7 billion, while we generated free cash flow of $3.4 billion during the third quarter, and returned $3.2 billion of capital to shareholders, including $2 billion in share repurchases. Over the last 12 months, we've reduced our share count by 6%, contributing to our adjusted EPS growth in the quarter of 3%. Let's dive deeper into our results for the third quarter, starting on Slide 4 with Connectivity & Platforms. As usual, I will refer to our year-over-year growth on a constant currency basis. Revenue for total Connectivity & Platforms was consistent year-over-year at $20.3 billion, reflecting strong growth in our connectivity businesses and political advertising, offset by declines in video and voice revenue, as well as non-political advertising in our domestic and international markets. Residential connectivity revenue grew 5%, comprised of 3% growth in domestic broadband, 19% growth in domestic wireless, and 8% growth in international connectivity. Business services connectivity revenue also grew 5%. In domestic broadband, our revenue growth was driven by ARPU growth of 3.6%, another strong result in the context of a continued competitive backdrop. Our team continues to effectively balance rate and volume through customer segmentation. In terms of broadband subscribers, we reported a net loss of 87,000 in the quarter, which included an estimated net impact of 96,000 associated with the end of ACP. Excluding this ACP-related subscriber loss, we would have reported positive 9,000 broadband net additions in the third quarter. Before I cover ACP in more detail, I want to spend a moment addressing the quarter's underlying results in broadband. Keep in mind that in the third quarter, we typically benefit from seasonal tailwinds due to back-to-school activity, and this year was no different as we performed very well in that category. In addition, we believe we also benefited to some extent from a competitor's work stoppage as well as from leveraging the Olympics by investing in incremental nationwide brand marketing behind our Olympic-related offers. Now, let me cover ACP. As I mentioned, we had 96,000 losses related to ACP in the quarter. That's roughly one-third direct losses we experienced in the quarter and the other two-thirds reflects a reserve we took for the number of subscribers that we predict will churn in the coming months due to a non-pay or delinquency status. Turning to domestic wireless. Revenue growth was mainly driven by service revenue, fueled by strong growth in customer lines, which were up over 1.2 million or 20% year-over-year, reaching 7.5 million in total, including 319,000 line additions this quarter. Importantly, our wireless customers are also broadband customers, and when bundled together, drive overall customer relationship ARPU growth, churn benefits for broadband and higher profitability. With wireless penetration at 12% of our broadband subscriber base, we have a very long runway for growth. We're pleased with our strategy and we'll continue to test new converged offers to capitalize on the significant opportunities we see ahead of us in wireless, including both increasing the penetration of our domestic residential broadband customer base as well as selling additional lines per account. And just to reiterate what Mike mentioned, we have an incredible hand to play in convergence. We currently have an offering for gig-plus speeds and wireless available ubiquitously to our footprint of 63 million homes and businesses today. And by ubiquitous, I mean we are not making any network trade-offs and every customer gets access to the same offerings. We believe we have a leadership position in convergence and we think we can sustain that. We're on a clear path to offer multi-gig symmetrical speeds, and we'll continue to grow our footprint projecting to add over 1.2 million new homes passed this year. International connectivity revenue growth of 8% was driven by broadband, reflecting strong ARPU growth, and in wireless, healthy service revenue growth was offset by lower device revenue. Business services connectivity revenue growth of 5% reflects steady growth in small business and even faster growth in enterprise. In small business, it continues to be a competitive market, but we are growing revenue with ARPU growth driven by higher adoption of a suite of additional products that expand our relationship with our SMB customers. At the enterprise level, we are taking share and continue to scale this business. In advertising, growth of 2% reflects stronger political revenue this quarter, partially offset by lower non-political domestic and international advertising revenue. Finally, video and other revenue declined in the quarter. The 7% decline in our video revenue is a function of continued customer losses, coupled with slower domestic ARPU growth versus last year. And the lower other revenue mainly reflects continued customer losses in wireline voice. Connectivity & Platforms' total EBITDA was consistent year-over-year at $8.3 billion, with margins up 50 basis points, reflecting a decline in overall expenses, driven by the continued mix shift to our higher-margin connectivity businesses and ongoing expense management, partially offset by an increase in marketing and promotion expense, driven by our incremental brand marketing investment during the Paris Olympics. Breaking out our Connectivity & Platforms' EBITDA results further, residential EBITDA was consistent with margins improving 40 basis points to 38.6% and business services EBITDA growth was at a mid-single-digit rate, with margins fairly stable at 57.4%. Rounding out Connectivity & Platforms, I'd note that our business continues to evolve as the mix shifts toward our connectivity growth drivers. As such, you've seen us take some cost reduction actions in our fourth quarter for the past several years. We expect to take similar actions again this fourth quarter at about an equal magnitude to last year. Now, let's turn to Content & Experiences on Slide 5. Revenue increased 19% to $12.6 billion, and EBITDA decreased 9% to $1.8 billion. At theme parks, revenue decreased 5% and EBITDA declined 14% in the quarter compared to last year's all-time record high. The majority of the decline was driven by lower attendance at our domestic parks when compared to last year. As we've highlighted, our view is there was both a pull-forward of demand that we clearly saw in 2022 and 2023, which were record years for the theme parks and beyond our expectations, as well as the new attraction pipeline, which is light this year, but building towards a substantial pipeline next year. We think these factors will likely be in place until the second quarter of next year, which is both when we start to lap the pressure we saw this year and the launch of Epic Universe. Looking ahead, we couldn't be more excited about Epic Universe and how it will transform Universal Orlando into a week-long destination. And as we gear up for the May 2025 opening, we expect to incur pre-opening costs of about $150 million in total over the fourth quarter this year and the first quarter next year. We remain bullish about the long-term trajectory of parks. In addition to Epic Universe, we have a fantastic slate of new attractions and experiences on the horizon. Donkey Kong Country in Osaka and a Fast and Furious roller coaster in Hollywood, as well as Universal Horror Unleashed in Vegas and our Universal Kids Resort coming to Texas. Now, let's turn to Media, where revenue increased 37% to $8.2 billion, including the strong results from the Paris Olympics, which generated $1.9 billion in revenue, a record level for any Olympics. Strength in the Olympics was mainly driven by a record $1.4 billion in advertising revenue, with Peacock contributing over $300 million of that. Excluding the Olympics, total advertising revenue was flat year-over-year as the overall market remained stable, while total media revenue increased 5%, driven by an exceptional quarter for Peacock. Revenue growth for Peacock was 82% and still a very robust greater than 40% excluding the Olympics. This was also a strong quarter for Peacock paid subscribers as we added 3 million net new additions driven not only by the Olympics, but also the return of the NFL, including our Peacock exclusive NFL game from Brazil, the return of the Big Ten, and several entertainment hits during the quarter including Love Island, Bel Air and Fight Night. Looking ahead, we will continue to be focused on strong revenue growth and improving profitability at Peacock in the broader context of expected revenue and profit growth across the entire Media segment. Media EBITDA in the quarter declined 10% to $650 million, but this was largely timing related as a profitable Olympics was offset by higher expenses due to the timing of other sports, including two additional NFL games in the quarter, an additional Sunday Night Football game and Peacock's exclusive game from Brazil. At studios, revenue increased 12% and EBITDA increased 9%, driven by the success of our film slate, including Despicable Me 4 as well as Twisters. Year-to-date, we have three of the top 10 box office titles, including Twisters, Kung Fu Panda 4 and Despicable Me 4, which has already grossed nearly $1 billion and is the first animated franchise in the industry to surpass $5 billion in global box office. Looking to the fourth quarter, Wild Robot debuted in September to terrific reviews and has had nice success at the box office, a great achievement for original animation. And we are particularly excited about Wicked opening in November. I'll wrap up with free cash flow and capital allocation on Slide 6. As I mentioned earlier, we generated $3.4 billion in free cash flow this quarter and achieved this even with significant organic investment. The $3.6 billion in total capital expenditures this quarter reflects spending to bolster our six key growth areas and, most significantly, our efforts in expanding our connectivity footprint through accelerating homes passed and further strengthening our domestic broadband network, and the continued buildout of our Epic Universe theme park ahead of its opening in May of 2025. Turning to return to capital, we returned a total of $3.2 billion to shareholders in the quarter, including share repurchases of $2 billion and dividend payments of $1.2 billion. In fact, our share count has been consistently shrinking mid-single-digits on an annual basis for the past several years. We've been straightforward and consistent in our priorities around investing in our six key growth drivers, protecting our strong balance sheet and returning a significant amount of capital to shareholders. This quarter is yet another example of that. Now, let's turn it back to Marci for Q&A.

Thanks, Jason. Operator, let's open the call for Q&A, please.

Thanks. Good morning. Mike, I’d like to revisit your comments on the strategic reviews regarding media, which are quite intriguing. Could you elaborate on the assets being considered in this portfolio review? It seems like you’re focusing on domestic cable networks, but you also brought up streaming, particularly concerning the complexity of separating Peacock from your linear networks. I’m curious about whether this might be less complicated than I’m imagining. How do you approach these aspects operationally, and do these assets need to remain together or not? Additionally, for either Dave or Jason, I would appreciate your thoughts on fourth quarter broadband subscriber growth. Do you believe you can achieve growth in Q4 considering the usual seasonal trends and other factors as we transition beyond ACP? Thank you.

Hey, thanks, Ben. It's Mike. So, let me be clear and just for everybody that maybe just picking up on this, I want to be clear about what I said is that we're going to commence a study of whether there's a good idea in the idea of creating a new well-capitalized company that would go to our shareholders, existing shareholders, comprised of our cable portfolio networks. So that's the group. I'm not talking about Peacock or broadcast. So that's what I said before. And I think the questions about how to do it are the reason we're announcing here that we want to study it. There are a lot of questions to which we don't have answers, so we want to do the work. And we want to do the work with transparency around it, so that as rumors fly and the like, we expect that, but we want our shareholders to understand what we're willing to look at. That's in the context of broader, we look at a lot of things, and I do think in a moment of a lot of transition in the industries we're a part of. I think we've got a very strong hand given the strength of the businesses. We just went through all of them with third-quarter results, and I think I'm proud of every part of it. And I think the idea of playing some offense, when you combine the balance sheet strength that we have, the assets we have, and the management team we have, there may be some smart things to do and we want to study that.

Okay. Ben, this is Dave. Let me talk about broadband. Before discussing Q4, it’s important to provide some context on Q3. The market remains highly competitive, which hasn't changed. However, we are satisfied with our overall performance in Q3, primarily due to strong execution on the fundamentals. As Jason mentioned, there are three unique factors in Q3. First, back-to-school, which consistently influences Q3. We performed well this quarter, matching last year's back-to-school performance. Second, the Olympics were beneficial not only for NBC but also for cable and our Connectivity & Platforms segment. We implemented an effective go-to-market strategy with strong offers and good product positioning, making it an ideal time to showcase our comprehensive capabilities with engaging content. This generated interest unique to that period. Third, there was the AT&T labor work stoppage, limited to part of their area for about 30 days. It wasn't a major factor but did have some impact. If we exclude the benefits derived from the Olympics and the competitor's work stoppage along with the ACP influence, while it’s difficult to measure precisely, our best estimate is that HSD subscriptions would have been slightly lower than last year’s Q3. Moving to Q4, we had two hurricanes affect some of our cable systems. While we’re assessing the effect, it currently seems that the potential impact will be significantly less than what we experienced with Hurricane Ian in 2022 regarding both subscribers and finances. We don't have specific numbers yet, but there will be some impact related to the hurricanes. Additionally, Q4 typically sees a seasonal boost in the southeast, which is helpful, although we need to consider the hurricanes' effect on this activity. The competitive environment remains unchanged, but we anticipate that churn will continue to stay low due to our focus on retention, utilizing a segmented management approach and enhancing our offers and product packaging, particularly with a focus on mobile. We’re also excited about integrating AI across all our sales channels, including retention. Lastly, it’s worth noting that Q4 won't benefit from back-to-school, so that's the current view for Q4.

Thanks very much.

Thanks, Ben. Operator, we'll take the next question.

Hi, thank you. I have two questions. First, regarding the theme park, as we look forward to Epic for next year, what are your thoughts on its capacity? How do you plan to balance potential demand in terms of volume versus possibly raising prices to enhance the experience with fewer crowds? I'm curious about how you approach that balance. Secondly, I have a housekeeping question. You mentioned a projected $150 million in costs for Q4. Is there anything from Q3 that we should know about concerning Epic anticipation costs? Lastly, on the cable side, what is your current perspective on BEAD? With your ongoing expansion, should we anticipate any significant changes in capital intensity as you gain more insight into the BEAD program and its implications for rural markets?

Hey, Craig, I want to address your question regarding the pre-opening costs associated with Epic. For the third quarter, the costs were minimal, about $20 million. To clarify your comment about the $150 million for the fourth quarter, my prepared remarks noted that these pre-opening costs would be distributed between the fourth quarter and the first quarter. I believe that more of the costs will be recognized in the first quarter.

Yes, Craig, it's Mike. We are extremely excited about Epic. It represents our most ambitious parks experience to date. It will have a premium ticket pricing, aligned with the Orlando market. Our focus is on enhancing the overall Orlando experience. Not only will it be a standout park, but it will also turn Universal Orlando into a week-long vacation destination when combined with our other parks. We aim to optimize the entire Orlando footprint while ensuring that the experience at Epic is exceptional, which will justify its premium pricing. Since we announced that the opening day will be May 22 of next year, we are already witnessing strong demand. In the coming months, we will undertake extensive promotional efforts to raise awareness for the park leading up to the opening day.

Hey, Craig, this is Dave. Regarding BEAD, the process is still ongoing. If we are successful, we are planning accordingly and expect to be involved. This primarily pertains to opportunities beyond 2025. There is active engagement at the federal and state levels, with many states establishing broadband offices to oversee this initiative. The finalization of the state BEAD participation rules is in progress, and as long as these rules support sensible private sector investment without imposing excessive price controls or other constraints, we intend to participate under reasonable conditions that align with our business objectives. We maintain strict thresholds and exercise financial discipline in these matters. It’s too early to determine the extent of our involvement, but we do not foresee any changes in capital expenditure intensity based on current observations. As always, we will assess any unique opportunities that may offer satisfactory financial returns.

Hey, Craig, let me broaden that out to footprint expansion in general and just sort of our philosophy there. We've obviously accelerated our footprint expansion a couple of years ago. If you rewind the clock, we were at 800,000 homes passed per year. Dave and team have sort of nicely driven that to 1.2 million homes and pacing towards that this year. What underpins that view and how we're underwriting it, because obviously we're putting capital towards it, is a view of sort of structural competitive environment over the long term. And from our perspective as we see it, the two key competitors, as you look at it this past year, fixed wireless has obviously taken its toll. We think that's a market that's going to continue to exist, continue to be around, but it's for the value-conscious consumer. It has carved out a niche in the market that whether it's 10%, 15%, I'm not sure we've got a crystal ball, but it is a niche. Fiber, as we've said, is the real long-term competitor. That's an entity that's been building out against us for almost 20 years at this point. It's been sort of a steady increase in our footprint. Right now, we're about 50% overbuilt. We would tell you that will go higher. Obviously, the carriers have announced plans to take that higher. So, we expect it to go higher and we expect to see competition across the majority of our footprint, including two wires, one of which is ours, which is currently a gig-plus, and we'll go to multi-gig symmetrical through how we're investing, and the others of which is fiber. But the long-term view is we've competed against fiber for almost two decades at this point. And so, we are seasoned in competing against fiber and we know exactly what fiber markets look like. So, if you go back and look at some of the early fiber markets and tenure markets where we've had a chance to sort of see the competitive progression, what you see is initial uptake and then you see the competitive environment sort of leveling out and you see relatively even share between us and fiber. We see ARPUs in those markets that are very consistent with our overall ARPU. So, when you think about sort of a long term, how do you invest against this, are you comfortable taking your footprint expansion to a greater level, these are all things that underpin our current investment and future investment.

Thanks. That's really helpful, Jason.

Thanks, Craig. Operator, next question, please.

Hi, good morning. Thank you very much for the question. I just have two. One housekeeping one, just on the Olympics. Encouraging to see the record $1.9 billion of revenue. I was just wondering if you could comment on profitability as well. And any way to better think about the potential uplift from Olympics on broadband net adds? And then, second, I wanted to ask about video. You had very good video net adds performance in the quarter as well as on programming costs. Anything that you would call out there that maybe improving the trends within video? Thank you.

Thanks, Michael. It's Mike. So, just on the Olympics, as I said earlier, we couldn't be more proud of what our teams accomplished across the whole company on the Olympics. So, we were cautiously optimistic going into the games that they would perform well given all the effort we put in in Paris to their backdrop, but viewership, ad sales exceeded our expectations and the games were profitable. I won't go into the level of profitability, but profitable games for us. And so, we walk away from it very excited as we look forward to future Olympics from here, because it was a spell leading up to Paris where prior Olympics, for a variety of reasons, had not performed as well as we had hoped. So, I think there's an incredible amount of energy and excitement as we look ahead to LA and beyond and Milan in between. And so, I don't know if Brian wants to jump in here.

I just want to add, it was probably the proudest moment that I can think of since we've owned NBCUniversal or certainly right up there, just a tremendous team effort technologically what Peacock pulled off and Xfinity with a combination of using just every athlete, every sport, every country you could search it many different ways, the social media impact with celebrity, the quality, the two broadcasts in prime time, and just really bringing the whole country and nation into the drama, the ratings and the ability to use that platform as we said for things such as broadband growth but also awareness for everything from Wicked to Epic to new shows being launched and many other initiatives in the company. So, one of the proudest moments. We really look forward to LA in four years. We've got Milan in between, and then we go on from there. So, it's a great partnership and kudos to Molly Solomon and many, many, many other people who had made that broadcast happen and Rick at NBC Sports and many others. Dave?

Thank you, Brian. Michael, there are two key points to address. First, as Brian mentioned, it was indeed a significant moment, particularly unique to Q3 with the media investment and our overall go-to-market strategy. Engagement is something we closely monitor, and we are in a distinctive position with streaming and the delivery of other content. It was a major moment on the Internet, and we were well-positioned to deliver. The way the Peacock team executed this was commendable. While we cannot provide a specific figure regarding the impact on broadband, it certainly contributed to Q3. In terms of video, we have identified two primary drivers. Video is still facing challenges, but we are seeing improvement. Churn has been stabilizing for some time. Notably, incorporating mobile into our offering has contributed to churn reduction. By surrounding our broadband services with the right package and targeting the appropriate segments, we can positively impact video. Moreover, high engagement levels, such as those seen during the Olympics, also contribute to this. Churn improvement is a significant driver for video. The second aspect involves connects. Our NOW portfolio, including NOW TV and NOW Latino, has effectively helped video engagement as we tailored these products for specific segments, allowing us to reimagine the platform to deliver quality content.

Excellent. Thank you.

Thank you, Mike. Operator, next question, please.

Thank you. I have two questions. First, following up on Jason's comments, we are starting to get a clearer understanding of what the competitive fiber landscape will look like in the US over the next five years. Jason addressed the impact on subscribers, but Dave, could you discuss how a new fiber provider entering an Xfinity market might affect ARPU and pricing power? Secondly, Jason, I know we are likely early in what could be a lengthy process, but could you provide some insight on the potential changes in the growth rate of the remaining Comcast assets if you proceed with the spin-off of the cable networks? What kind of improvement in growth rate should we anticipate? Thank you.

Hey John, this is Dave. Let me talk about how fiber affects ARPU. We consider two main factors: market share and pricing. Over the last two decades, we've observed how fiber's entry into a market impacts penetration levels and market share. We compete aggressively with a well-developed strategy, and eventually, market share balances out. Healthy ARPU levels remain consistent between fiber and non-fiber markets due to our segmentation strategy. As Jason mentioned, our core network focus starts at premium offerings, ensuring a top-notch Internet experience not just in speed but also in coverage, capacity, and latency. We're committed to providing the best WiFi experience with our gateway devices, which is essential for content delivery in homes and businesses. Good WiFi has contributed positively, and while our churn rates are solid, ARPU remains stable as conditions normalize.

John, it's Mike. On the question about the potential for a spin and impact on revenue, I would just say I don't want to get ahead of ourselves. Obviously, we do anything like that, it will have an impact on the consolidated company. But I think the point that we'd make is that it doesn't change the fact that within the business today, we've got six growth drivers that represent more than half of our revenues that are growing this quarter at 9% or so, and on a trailing basis, been in that high-single-digits, sometimes 10%. So, the company is transforming itself to a top-line growing company as our mix changes. Whether we do something like a spin or not, I'd focus everyone on what the underlying is.

Got it. Thanks, guys.

Thanks, John. Operator, next question, please.

Thank you. So, we have one on NBC and one on cable. NBC is actually a multi-part project with a lot happening in the coming years. I’d like to follow up on Epic. Can you provide some insight into your thoughts on how it will affect the bottom line over the next three to five years? Clearly, you'll gain market share in Orlando, which is significant, but how do you anticipate it impacting the bottom line? Regarding the NBA, can you discuss monetization? There is a considerable increase in investment, but you mentioned an interesting opportunity outside of the regular season, particularly with NBC and Peacock. Lastly, I have a question about the potential spin-out. Can you share your thought process? Do you see it as a roll-up vehicle for the industry? On the cable side, we see Charter signing agreements with all the streaming platforms included, and you have taken a different approach. Could you discuss how your video offering will develop over time? Thank you.

So, Jessica, it's Mike. I'll go through these points quickly. The Epic is expected to incur $150 million in pre-opening costs in the near term and will open midway through the year, which will positively impact the parks' profit and loss next year. We hope it will enhance the overall experience and provide a solid return on the investments made in Epic and the wider Orlando offerings, which include 11 hotels and multiple parks. We're very confident about this in the long run, though I won’t provide specific guidance on that. Regarding the NBA, consider it a long-term investment; we anticipate it will add value to our company, especially in the media segment, helping with both broadcast and streaming. We observed this during the Olympics, where the intersection of broadcast and streaming for sports showcased their unique strengths. There was significant viewership for the Olympics on traditional channels despite the impressive production on Peacock. We believe we have a well-rounded strategy between broadcast and Peacock. The NBA will transform NBC and Peacock into a year-round sports destination, which is advantageous as we manage churn in streaming differently than in traditional media. The NBA is likely to attract a younger, more diverse audience, and this allows our teams, led by Donna Langley and Pearlena Igbokwe, to engage with that audience effectively, along with the talent from the NBA itself. As for the spin-out, there’s nothing further to add; we've discussed it before and will explore opportunities there. We believe we have strong assets and a solid balance sheet. On the distribution front, especially concerning NBC, it's vital for any media business. We're pleased to have completed 10 renewals in the last 15 months, including recent agreements with Charter and Hulu. This includes both traditional and streaming distributors, highlighting our content's appeal and our ability to collaborate with important distribution partners who have varying business goals. We're currently negotiating our final renewal for this year with DIRECTV and are having constructive discussions, hoping to finalize without disruptions like our previous agreements. This stability enhances the strength of our revenue stream.

No question, and Brian nailed it. That experience is key for us, and we intend to do more. If there's a significant sports moment, I think people want to collaborate with us. We enjoy it and make it simple and easy to find what you want in the moment. The Sky team excels at bringing shows to life with unique programming, and we've applied that strategy in the US. Therefore, whenever there's a major moment in entertainment, we will continue to be involved.

Thanks, Steve. That concludes our call. Thank you all for joining us this morning.