Comcast Stock Slumps After Broadband Losses and Peacock Stagnation

Comcast Corporation (CMCSA) experienced a significant 10% decline in its stock price on Thursday morning. This downturn followed the company's earnings report, which revealed a larger-than-expected loss in broadband customers during the fourth quarter.

Broadband Losses Escalate

Comcast reported a loss of 131,000 broadband users, exceeding the 100,000 loss estimated by Comcast Cable CEO Dave Watson in December. The escalating losses indicate competitive challenges posed by mobile providers such as Verizon (VZ), T-Mobile (TMUS), and AT&T (T), which have attracted lower-income consumers with flexible offerings.

Strategic Shift to Bolster Connectivity

Despite the broadband struggles, Comcast remains committed to its connectivity business. The company announced strategic changes to leverage its strengths as internet traffic surges amid the streaming boom.

Comcast plans to bundle mobile service with higher-tier broadband products for both new and existing customers. According to Comcast President Michael Cavanagh, "Wireless is a meaningful differentiator as our converged offers provide great savings to the consumer."

Pay TV Decline Continues

Comcast's broadband woes coincide with a decline of 311,000 TV consumers in the fourth quarter. Consumers continue to cut the cable cord in favor of more affordable streaming services. Comcast recently introduced a new sports and news TV package, including Peacock, for $70 per month. This price point undercuts competitor YouTube TV (GOOGL, GOOG).

Peacock Growth Stagnates

Peacock, Comcast's streaming service, experienced no change in subscribers during the quarter. Total paying users remain at 36 million. Despite emphasizing the importance of Peacock, the company acknowledges challenges in the competitive streaming market.

SpinCo Spin-Off on the Horizon

Comcast announced plans to spin off its cable properties, excluding Bravo, into a separate entity called SpinCo. This move aims to address industry challenges and capitalize on the changing cable and digital media landscape.

Analyst Perspective

Analysts remain cautious about Peacock's growth prospects. Ross Benes of Emarketer noted that "Peacock is finding out that it's expensive to compete in the streaming wars." Despite the challenges, Comcast executives express optimism about SpinCo's potential.