The nation's largest cable operator, with more than 22 million subscribers, is expected by most analysts to lose video subscribers for the second straight quarter after two quarters of growth when it announces its third-quarter earnings on Wednesday. But a boost in data subscribers, sharply higher revenue per subscriber and more business at its theme parks are likely to make up for fewer video customers.
The number of new television subscribers is a closely followed metric by Wall Street, as TV operators such as Comcast continue to fight to keep customers from cutting the cord and moving to less-expensive streaming services such as Netflix (NFLX) - Get Report and Amazon's (AMZN) - Get Report Prime Video.
(Comcast rival AT&T (T) - Get Report is preparing its own streaming service, DirecTV Now, and moved over the weekend to acquire Time Warner (TWX) for $85.4 billion. Barclays media analyst Kannan Venkateshwar has said an expanded AT&T is likely to prompt Comcast to launch an over-the-top service of its own.)
But analysts remain solidly behind Comcast, with buy recommendations from 21 out of the 28 who follow the company, according to MarketWatch data.
The Wall Street consensus earnings estimate for the company is 91 cents a share, according to Thomson Reuters' (TRI) - Get Report StreetEvents. Last quarter, the company beat the consensus, reporting earnings per share of 83 cents, 2 cents higher than analysts' estimates.
Amy Yong, an analyst with Macquarie Securities, hiked her rating for Comcast to outperform on Monday despite an anticipated loss of 11,000 video subscribers. The losses would be an improvement over the 48,000 video subscribers Comcast lost in the same quarter last year. Moreover, Yong projected the company would gain 320,000 subscribers for its high-speed data service and 19,000 for its phone service.
"Comcast's 2-plus years of consecutive improvement in churn on top of healthy 3-4% [average revenue per user] growth is a testament to the stickiness of its bundle," she wrote in her report.
To fend off video losses to rival streaming services, Comcast has invested heavily in both technology and content. More than 40% of its subscribers have access to its X1 set-top box, which allows them to order more than 85,000 shows on demand, according to Comcast CEO Brian Roberts. By year's end, that number will rise to about 50%, he has said.
The company also has installed voice-activated remotes in 10 million homes, he said, and is putting about 1 million more a month into its customers' homes.
"I think we have accelerated our X1 rollout because the results at every step have been more positive than we expected," he said at Goldman Sachs' GS Communacopia Conference on Sept. 20. "There's a bake-in period to get used to it, and after that we see more DVR penetration, more pay-per-view purchases, more time enjoying our product. "
In a further bid to keep its customers from wandering, Comcast also struck an agreement in July to provide them with the ability to access Netflix directly from their Comcast set-top boxes.
One negative for the company is that Comcast likely won't get the same lift this quarter from its Universal movie studio, which last year released megahit Jurassic World. The film collected nearly $1.7 billion in worldwide ticket sales, according to the Box Office Mojo website.
Its theme park unit, however, enjoyed a hefty summer after the opening in April of The Wizarding World of Harry Potter ride at its Hollywood, Calif., theme park. The company also will likely see a boost in revenue after spending $1.5 billion in September to buy the 51% of the Universal Studios Japan theme park it didn't already own.
Comcast shares Tuesday afternoon were up 48 cents, or 0.74%, to $65.44.
A company representative declined comment on the AT&T-Time Warner tie-up or other matters.
This article is commentary by an independent contributor. At the time of publication, the author held positions in Comcast, Netflix and Thomson Reuters.