Comcast (CMCSA) shares plummeted by as much as 7.5% on Monday after CEO Dave Watson revealed the company expects to lose over 100,000 broadband subscribers in the fourth quarter, surpassing Wall Street’s prediction of a 63,300 decline, according to Bloomberg’s consensus estimates.
Stock Reaction
The stock’s midday slump marked Comcast’s largest intraday decline since April 25.
Broadband Subscriber Losses
Watson, speaking at the UBS Media Conference in New York City, outlined the factors driving the losses:
- First Half Trends: “We lost just under 100,000 [broadband subscribers] per quarter during the first half of the year,” Watson said.
- Temporary Q3 Gains: The third quarter saw improved performance due to Olympic marketing efforts, seasonal student returns, and competitor disruptions.
- Return to Q1-Q2 Patterns: These temporary gains were not sustained, as Q4 trends resemble those from earlier in the year.
In the third quarter, Comcast reported a loss of 87,000 internet customers. Watson described the broadband marketplace as “competitively intense.”
Competitive Pressure
Mobile providers like Verizon, T-Mobile, and AT&T have entered the broadband market, targeting budget-conscious consumers with flexible plans. All three companies recorded subscriber gains in Q3.
Additionally, two hurricanes in the Southeast earlier this year exacerbated broadband losses by approximately 10,000 subscribers and caused a slight dip in average revenue per user (ARPU).
Watson expects ARPU growth to remain at the lower end of a 3%-4% range for the current quarter.
Cable Cord-Cutting
Comcast’s struggles extend beyond broadband. The company reported a loss of 365,000 TV customers in Q3 as more consumers transitioned to streaming services.
Strategic Moves
To address the challenges posed by cord-cutting, Comcast announced plans last month to spin off its cable TV properties (except for Bravo) into a new entity, tentatively named SpinCo. This move, aimed at adapting to industry shifts, will house networks such as USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and the Golf Channel.
Comcast’s strategy reflects an effort to “play offense” in a market increasingly dominated by streaming and intensified competition in broadband services.
