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Comcast: We May Lose 150,000 Video Subs In 3Q

Comcast startled the industry yesterday when a top executive revealed that his company could lose 150,000 video subscribers in the third quarter which ends at the end of this month.

If that happens, it would nearly wipe out the cable operator’s entire net gain for all of 2016 when it added 161,000 video subscribers. (Comcast added a total of 8,000 video subscribers in the first two quarters of 2017.)

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Matt Strauss, a Comcast executive vice president, was asked yesterday at an industry conference about the company’s recent success in adding video subscribers, which has bucked an industry trend.

The traditional pay TV business has lost hundreds of thousands of subscribers in the past year due to everything from cord-cutting to new streaming services launched by the pay TV services themselves such as Dish (Sling TV) and AT&T (DIRECTV Now.)

Strauss said increased competition and Hurricane Harvey (and Irma to come) will likely reverse its success of the past 18 months.

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“So in Q3 you can actually expect to see us lose in the neighborhood of 150,000 video subs, and that’s going to be partly due to the competition, it’s also going to be due in part to the terrible storms that we’re seeing which are affecting two of our divisions,” Strauss said at the Merrill Lynch 2017 Investor Conference in New York.

The Comcast executive also hinted that the company may be more focused on generating more revenue per video subscriber rather than simply reaching a higher number of total subscribers.

This has been the recent strategy of some other cable operators such as Charter which has maintained it’s more important to generate higher profits rather than adding more subscribers for appearance’s sake.

“What you’ll also see is us hit our financial numbers because we’re very focused, we’re very disciplined and we’re really looking at household economics, growing (average revenue per subscriber), growing positive cash flow and not getting distracted by unprofitable video subs but looking at it more through the lens of relationships. And to that end, while we’ll have a loss on video subs, we’ll actually have an increase in total customer relationships in the neighborhood of 100,000 for the quarter,” Strauss said.

He added: “So I think it is the right balance and I think that you will continue to see us appropriately grow video but do it in a very financially responsible way.”

Despite Strauss’ attempt to alleviate investor concerns, Comcast’s stock yesterday dropped nearly five percent after his presentation to the Merrill Lynch conference.

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— Phillip Swann