Netflix shares, which are the subject of great debate on Wall Street, rose more than 7% Thursday in the wake of a concession by Comcast earlier in the day that the media giant will continue to lose…
great optimism about Peacock’s potential to lift the entire business. But the subscriber losses in the fourth quarter, and downbeat internal guidance, helped drag down Comcast shares by nearly 4% on the day, to a closing price of $45.65. They had hit record levels in recent sessions after last Thursday’s investor presentation about Peacock. Subscriber losses of 133,000 in the period rose exponentially from just 19,000 in the year-ago quarter, a pattern similar to that of many recent quarters.
Like many pay-TV providers with significant broadband footprints, Comcast has been less defensive about video subscriber losses than it was years ago, given the profitability of broadband. Cord-cutters don’t fully cut any actual cord, as they still need broadband in order to access streaming. Stifel analyst Scott Devitt, who has a “buy” rating on Netflix shares, said the quarterly report from Comcast, the No. 1 U.S. cable operator. In a note to clients, he pushed back on a common bear narrative about Netflix, which is that new players like Disney+ and Peacock will be able to undercut Netflix on price, given that they are well below Netflix’s most popular $13 a month plan.
“Comparing Netflix to introductory pricing and/or inferior over-the-top products as a justification for worrying about the competitive climate is missing the fact that the cable, telecom, and satellite video industry is shrinking with no end in sight,” he wrote. Netflix reported its own fourth-quarter numbers on Tuesday, soaring past projections with 8.8 million new subscribers in the period but also posting another less-than-scintillating showing in North America.
Not everyone saw Comcast’s losses as Netflix’s likely gain. Jeff Wlodarczak, an analyst with Pivotal Research, called the Comcast quarterly results “bulletproof” in a note to clients. While acknowledging that 2020 will be “a record ugly year for pay-TV,” with millions more subscribers heading out the traditional door, Wlodarczak said there is more than enough under Comcast’s roof to counter that downturn.
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