While a host of companies like Apple, Microsoft, Netflix, Roku, and Sony roll out Internet TV devices, Comcast — the current king of the living room — isn’t seeing much competition. If anything, Comcast CFO Michael Angelakis says, it’s good for them — more subscribers using high-speed cable Internet.
“I think that we’ll compete with them to get more content on video-on-demand and those kinds of aspects,” Angelakis said today at Goldman’s annual communication conference. “But we’re not really seeing much impact from them as competitors. Actually, any impact.”
Angelakis says the company serves up some 300 million video on demand streams a month to its 16 million digital cable subscribers and hopes to end the year with 1,000 hi-def on-demand titles.
Meanwhile, Angelakis thinks his company’s two major Internet acquisitions this year — email newsletter Dailycandy and contact manager Plaxo — are “interesting”…
Dailycandy is a very interesting acquisition. It’s very local, it’s in a lot of our markets — Boston, New York, Chicago. It’s free-cash-flow accretive, so financially, it’s actually a very attractive acquisition to us. It also adds lot to our entertainment, sort-of lifestyle genre that we’re focused on, whether it’s E! or Style, which we have on the programming side, or whether it’s on Fandango and [subscriber portal Comcast].net. So we think Dailycandy is a very smart acquisition both financially and strategically, where we have a rapport with 2.5 million subscribers every day that we can talk to. It broadens our appeal with advertisers to a pretty interesting demographic. So I think it was a very interesting acquisition for us.
Plaxo is a little bit different. That’s more cross-platform oriented, whether it’s online or whether it’s even on phone service, or whether it’s on our data service and how we integrate it with .net, I think that is a little bit different but obviously a pretty interesting transaction as well.
9:39 Joining in progress after problems with Goldman’s Webcast.
9:39 What’s least appreciated about Comcast? Business model with real resiliency. Not immunite to competitive or economic factors, but resilient business.
9:40 Recent credit market doesn’t really mess us up. If you look at where our exposures are, credit lines, etc. Goldman is a wonderful lender to us.
9:41 Does economy/credit market affect capex? I don’t think so — focused on risk/reward, returns. Somber feeling, but our business plan is there. But we know what we have to do, whether DOCSIS 3.0, all-digital, digital transition in February.
9:42 Wireless broadband and WiMax rollout? You agree with our view that wireless broadband isn’t imperative. What if Sprint-Clearwire JV not fully funded? Would you consider putting more capital in? Lot of runway between here and there. First need to get transaction closed and JV formed. When that happens, $3.2 billion of cash comes in. We’ll be 7-8% shareholder. Then tons of spectrum rolls in. With that amount of spectrum, modest debt facility, that amount of equity infusion, I think it boils down to management team and partners executing on the business plan.
9:44 No real update. Early days. Working well with partners, hopeful. Same visions you have.
9:45 We have linear channels with content. Now repurposing that with VoD. 300 million video watches a month on VoD. Fancast. Whether linear, VoD, online, eventually mobile. We like content, our content business is doing very well. I don’t think it’s an either-or scenario. We’ll look at everything; a number of networks for sale either this year and passed. Will continue to look at them as we continue to look at sort of the seven business areas we’re in right now.
9:46 Overall M&A strategy? Seven revenue streams coming in, all with different maturity levels. There’s strategic filters and financial filters. Very disciplined, very careful about what returns are. Certain acquisitions with higher risk of success, vs. buying small cable system that’s next door to existing cable systems. Looking for complementary areas where we can add value.
9:48 Looking at everything! Active in regional sports network. In 8 of top 10 markets own regional sports networks. Branded Comcast Sports Net; even competitors are carrying it. Made a couple acquisitions in last 12 months.
9:49 Internet buys? Dailycandy is a very interesting acquisition. Very local, in a lot of markets — boston, NY, Chicago. FCF accretive. Financially, a very attractive acquisition. Adds to lifestyle content — style, E! entertainment. Financially and strategically. Have rapport with 2.5 million subs every day. Broadens appeal with advertisers to an interesting genre. Plaxo a little different — on voice, data side, how we integrate with .net.
9:50 “I don’t really focus on telcos.” Focused on “just competing.” If you look at Q2, look at video, in 2005 lost over 100,000 video subs. Same in 2006 and 2007. In 2008, where you can argue most intense, lost 137,000 subs. Delta is about 30,000 subs. Given competition and economy, I think that’s a pretty good job. If you look at broadband, 75%-78% market share; not dealing with ARPU issues, bottom line just have a superior product. If you look at phone, growing that too. Being more cautious; not dealing with delinquencies.
9:52 Blocking and tackling.
9:53 More talking about peeling onion back!
9:53 TWC has said Q3 is seasonally weak while CMCSA says seasonally strong. We’ll talk about that in another month or so. Very focused on executing our plan for this year. Initiatives we’re really excited about — DOCSIS 3.0, all-digital, etc.
9:54 Fios is roughly 10% of footprint. They’ll grow a little more, don’t know where they’ll end up. In 90% of our footprint, I don’t think anyone has a superior product.
9:56 1000 HD on demand titles by end of the year, “project infinity” by next year. Continuing to deploy HD boxes at a pretty rapid pace. We’re bullish on HD, we’ll do more. I don’t know what the right number is, but I think diminishing return when you have 50 channels or 70 channels.
9:59 Commercial: This is a great business. Opportunity is “so there” for us. Up to our group to go out there and gain share. Starting to do a very good job at gaining share on commercial side. Hired 2,500 people, 1,000 sales people. Some wind in the sails. We’re garnering some momentum; really optimistic about it. With regards to economy, would much rather sell into a good economy than a softer one. Businesses may be more into value now, which could benefit — but not ideal.
10:03 Said you have both strategic and financial filters for wireless. What sorts of services? Can’t go too much into them for a whole bunch of reasons. A number of dark clouds when I joined the company a little over a year ago. Very creative and very focused on how we’re dealing with strategy. How it fits through filters — looking for partner with a lot of spectrum and bandwidth. No company will have as much as the new Clearwire will have. Think that passes test. Investment will prove to be a very good investment; benefits will prove out to be very good. 3G wholesale agreement with Sprint, too. Could be plan B, could be a whole number of factors.
10:05 No intention of building out AWS spectrum for now. Our focus is how do we make CLWR stategy and investment successful? AWS could be excess asset that we don’t need.
10:09 Entire company all digital in 18-24 month period.
10:10 Video boxes: Not a complete threat. Using high-speed service; that needs a lot of speed. Try to do those things over a DSL line and you’re DOA. I think we’ll compete with them to get more content on VoD and those kind of aspects, not seeing much competition from them.
10:12 Wrapping up.
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