Craig Moffett: Got it, that helps. Thank you.
Marci Ryvicker: Thanks Craig. Operator, next question, please?
Operator: Certainly. Our next question is coming from Jessica Reif Ehrlich from Bank of America Securities. Your line is now live.
Jessica Reif Ehrlich: Thank you. I have a question on NBCU and also on Comcast cable. On the theme parks, which is clearly one of your growth pillars, can you give us the investment levels you expect over the next five years? Obviously Epic will be in there, so it’ll be a little elevated, but you have other new parks and you’re also investing in the existing parks, and how different is the return on invested capital for theme parks versus your other businesses? Then one more on NBCU, are there other areas NCBU should, or you’re thinking about investing in, like video games? Then on cable, on Comcast cable, just a question on your programming expense or programming contracts. Presumably you have MSNs – I think you’ve always had them. How should we think about the impact on Comcast cable programming expenses as some major programming contracts come up with other distributors? Thank you.
Mike Cavanagh: Hey Jessica, it’s Mike. On parks, as we’ve said, this is a year in 2024 where capex in parks and at NBC Universal overall will sustain at the level it was in ’23, so remain elevated. In ’25, when we open Epic, it will begin to step down, and then after that it will return to a more normal level, with adjustments for the Hollywood horror nights and the kids park in Frisco, Texas that we’ve talked about. But those, as we’ve said, are not of the same size and scale as a large park like Epic, so–but we do have a bigger footprint of parks than we did, say five years ago, so you’re right – part of the capital equation for parks is to continue to invest in new attractions within existing parks. Again, once we get to ’26, you’ll see us easing into a new steady state that does include continued experimentation with some of our alternative concepts, and then certainly we hope over the longer term to come up with some ideas for bigger deployments of capital.
That’s what we have in our plans as we sit here right now, but we love the business, and to the question of returns, we think the returns are very strong – we take a careful look at that every time we’re greenlighting a new park, and I think we like the stability of the long term nature of the returns. It’s us and one other great company that are world leaders in that level of park experience. The response to our parks has been phenomenal coming out of COVID, and so we see that being a place, live entertainment at the level we’re talking about being just a strong pillar of the media and entertainment side of the company for a long time ahead. Then in terms of other areas, I think the success that we’ve had across parks and experiences are–you know, lead us to plenty of opportunities to think about gaming and other areas around live entertainment that go around and cross between our businesses.
We experiment with things and we look, and it’s our job to see if there are great opportunities to do that, but nothing to report today.
Dave Watson: Hey Jessica, Dave. Just on your question on renewals and our point of view, look – from our view, there is not a single approach towards–you know, we handle it on a case-by-case basis. When you step back for a second, though, we evaluate each one in three primary areas: one, the overall cost relative to the content, flexibility that’s required in a very fast changing environment, and the overall consumer value. We’re going to look at this significant transition that has been going on, will continue to go on between linear and streaming, and so that is something that we think we can play a unique role in, in terms of win-win opportunities between the content providers and distribution. For us, we have a unique platform that is positioned well to be able to do–handle everything that video can handle – linear channels, on demand, DVR and streaming.
We’ve been doing streaming packaging on the platform for some period of time, so we can build bridges as these things come up, but our goal consistently has been to find win-win opportunities as we examine each and every specific renewal. That’s how we’ll evaluate each one.
Marci Ryvicker: Thanks Jessica. Operator, we’re ready for the next question, please.
Operator: Our next question is coming from John Hodulik from UBS. Your line is now live.
John Hodulik: Great, good morning guys. Two, if I could. Maybe first for Jason, just finishing up on ACP. Given the strong start you guys had to the year and the strong ARPU, do you guys think that you can keep domestic cable EBITDA flat to up for the year, even with ACP going away? That’s first. Then maybe for Dave, the wireless companies are definitely talking a bigger game on fixed wireless in the business market. I know you guys had some sort of strong comments in the prepared remarks about the business market, but are you starting to see some increasing competition leak in at the low end because of fixed wireless? Thanks.
Jason Armstrong: Yes John, let me hit domestic–or cable EBITDA, CMP [ph] EBITDA over the course of the year. I think as you mentioned, it’s a competitive market, we’ve got ACP coming out way. At the same time, the balance–you know, think about broadband specifically, the balance between rate and volume we’ve seen, obviously a little bit of pressure on volume but 4.2% ARPU growth in the quarter, an outlook for–you know, we continue to stay 3% to 4% during the year, so we still think there’s tailwinds for broadband revenue growth. We had 3.9% this quarter, we’re growing business services, we’re growing wireless, and we’re offsetting video and other revenue declines, but at the total level, that’s a margin accretive mix shift.
I’d go back to what I said before on some of the expense initiatives across the company and being very disciplined, taking volumes out of the system, and that’s providing a tailwind as well. Without giving specific guidance for EBITDA growth, I would give you the components and our confidence in them.
Dave Watson: Hey John, Dave. Just a follow-on to Jason’s point in terms of ACP, remember–I think a really important point, we’ve been segmenting the marketplace and I think we’ve had the industry leading platform in terms of Internet Essentials for a very long time, a decade plus, so we are familiar with the segmentation in this area and we’re very familiar in terms of promo roles in bigger moments like this. Because of that, in particular the ARPU point that’s connected to it, we feel pretty good about the historical range of 3% to 4%, but we’ve had a longstanding approach towards this. On your question around business services, there’s no question, John – the SMB market has become a bit more competitive, and fixed wireless is a part of that.
We’ve seen it in the results, we now have three fixed wireless competitors that are in it. When you have that much all at once, there’s some impact, so we’re seeing it in SMB, it’s unique to SMB. But our game plan consistently has been to focus on both the share and the overall–you know, the rate, and we have a great slate of products. We have multiple segments within business services, midmarket and enterprise that offset a lot of this, and great product road maps that have. But a really important point, as you feel competitor pressure, I think it’s important to keep in mind uniquely to SMB that reliability and ubiquity of our products in business services is really key here. For businesses, they get 24/7, they’re always on, it has to work.
I think over time, we will continue to press that point and have–you know, we’re not going to chase things down to zero in terms of discounting. We’re going to offer better products and surround those products with features that make sense for business customers, but we will make sure that the customers know the reliability and ubiquity of what we do is unique and different than fixed wireless.
Brian Roberts: This is Brian. One–just again, just as we talked about in the residential market, the long term opportunity where we’re only just getting started is that large enterprise and medium size business, and as you think about cyber security and other data reliability and just consumption behavior of businesses, and think of your own businesses and where that might lead to and the use of new tools and video and everything else, you want to have the best network, and once again we have a really exciting team and road map on that front. So again, we’re battling the reality in one segment with great opportunity in others, and long term, love our situation.
John Hodulik: Thank you.
Marci Ryvicker: Thanks John. Operator, next question, please?
Operator: Certainly. Our next question is coming from Stephen Cahall from Wells Fargo. Your line is now live.
Stephen Cahall: Thank you. Maybe first, just on broadband trends, I think you’ve been pursuing a line extension strategy for at least 18 months, and that will continue, so is it correct to assume that your gross adds on broadband are starting to pick up, just as you add more passings in the market? If that’s true, can you give us any color on within the deactivations, where they’re headed? I think you’ve always said that you view fiber as the bigger competitive threat, and so does that kind of help us understand what’s going on between gross adds and net adds? Then separately on Peacock, you talked about retaining subs between some of your big marquee sporting events, and you’ve got a lot of great film on Peacock as well. I’m wondering what your tolerance is for original content and original content spend, and how we think about originals on Peacock maybe vis-à-vis a long term breakeven goal. Thank you.
Dave Watson: Hey Stephen, this is Dave. Let me start with footprint and then go to competition views. In terms of overall footprint expansion, the vast majority of our new passings each quarter are fill-ins within our existing footprint. The balance of the growth is mostly from our organic edge-outs into adjacent areas, and with some government subsidized builds representing a much smaller, albeit increasing portion. There’s really the kind of three different components of it that we’re looking at. It’s still early, but we are very disciplined. We evaluate the risk-adjusted returns of each one of these network builds on a case-by-case basis, and generally though, the edge-outs, as that will increase, they’re adjacent, sometimes located in between geographic markets that we currently serve, so looking ahead, we expect these edge-out projects to continue to contribute to the future growth in our total passings.
We don’t give, to your question, specific numbers on this. I can tell you that we’re going to reach very healthy penetration levels in a few years on these edge-out projects. The ramp-ups happen pretty quickly, and we’re pleased with the returns, so a pretty disciplined process, we look on the returns. Then as you shift towards the competition, the environment–let me back up, overall it’s a very intense, competitive environment that is very consistent the last several years, and so it’s picked up a bit, and when you have, again, three fixed wireless competitors coming in pretty much at the same time and you have the fiber level, about half of our footprint now has fiber competition of some form in it, it’s an intense competitive environment.
