Comcast Class A Earnings Call Nuggets: M&A Outlook and Promotional Activity
Comcast Corp Class A (NASDAQ:CMCSA) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Jessica Reif-Cohen – Bank of America Merrill Lynch: Thanks. One Cable and one NBCUniversal. On Cable, I’d love to get your views on M&A, is there any room for Comcast to grow either domestically or internationally?
Michael J. Angelakis – CFO and Vice Chairman: Okay, why don’t I take that question? With regards to M&A, I think you can tell by the results we’ve just posted, we’re really focused on executing our business plan. We really think there’s a lot of organic growth opportunities in the business. That being said, we always want to look at everything. We want to be educated. We really want to spend time internationally. We’ve about $4.5 billion of our roughly $65 billion revenue base in international. So we’re a bit underweight, and every country is very different and certainly relates to NBCUniversal and some of their business. So I would say, number one, we’re really focused on just running the business and executing our plan. Number two, we remain very disciplined and we have these strategic and financial filters that we utilize for all M&A. Number three, we want to make sure we’re very well educated on what the market is, and those kinds of items. So I think that sort of summarizes how we view M&A both domestically and internationally.
Jessica Reif-Cohen – Bank of America Merrill Lynch: Just a follow-up on that one. How big are you legally? Is there a limit in terms of how big you can get in the U.S. in cable?
Michael J. Angelakis – CFO and Vice Chairman: I don’t think there really is. There’s been a number of rulemakings that have been knocked down, but obviously that’s a grey area.
Jessica Reif-Cohen – Bank of America Merrill Lynch: Then I guess, turning to NBCUniversal, you guys in the past have spoken an entitlement gap. I’m just wondering if you could address that in terms of where you’re on both affiliate fees and CPMs for the cable networks; and I guess the same question on Broadcast in terms of CPMs and retrans…
Brian L. Roberts – Chairman and CEO: So just to define it, entitlement gap is what we call the gap between the true performance of our cable channels and broadcast network, and what our CPMs are relative to other like channels, and what our affiliate fees are. On the affiliate fees side, we’ve reset about 25% of our affiliate yields in the last year or so and made good progress, but the other 75% will occur in the years to come and we think there is clearly a gap in terms of what we deserve to be paid and what we are paid based on where the marketplace is. On the advertising side we have the same kind of gap and the same kind of opportunity in some instances there are cable channels and broadcast channels that get over 20% more than we do on a CPM basis, and I think over time we’ll have the opportunity to eliminate that gap or start chip away at that gap. We just finished the upfront and we made good progress toward eliminating that gap both from the broadcast side and on the cable side. On the broadcast side net of the Olympics we sold about 13% more than we sold last year our ratings and CPM performance on the NBC side were the best we’ve had in about 9 years. And we made up relative performance versus our other competitors. On the Cable side we also had good results our Cable CPMs were up in the 7% to 8% range. U.S.A and Bravo did very well. One of the ways that we accomplished this was we sold all of our properties together which for a company like ours with so many different television properties allowed us to go into the market with a one stop shopping sort of full integrated approach and we think that works. So we are chipping away at the entitlement gap we think it’s a big opportunity for the company. It’s not something that we are going to get in a quarter or even a year. But I think over the next 2, 3, 4 years you’ll see real progress there.
Jason Armstrong – Goldman Sachs: Couple of questions both on the cable side. I guess first video and broadband metrics both better in the quarter and better year-over-year, is there any sort of promotional activity you’d call out that maybe contributed to and above current quarter and 2Q or as we think forward about this we continue to expect sort of year-over-year improvement in those metrics and then second, just of the content cost 8.1% growth this quarter, I think you obviously talked about it accelerating in the back half of the year, is are we supposed to think of this as sort of relative to the initial guidance we’ve sort of pushed out a number of the resets by maybe six months or so, so some of this spills into 2014? Thanks.
Neil Smit – President and CEO, Comcast Cable and EVP, Comcast Corporation: It’s Neil. On the video and broadband side, I’d say that there was no unique promotional activity this quarter that would have driven the performance in the sub numbers. I think on the video side, we’re putting out great products and the excellent product is out over half of our footprint right now. We reduced losses by 17,000. So, we’re executing well. The channel performance has been strong in the online channel. So, I think it’s a combination of execution on the channel side as well as just getting better product out there that’s helping on the video front. With Asia TV, we’ve done speed upgrades in the first half of the year. We have about 14 million customers 70% of our footprint we did speed upgrades we’re putting out into new fastest gateways to have the fastest WiFi in the household. So, I think our product is fundamentally better product and I think customers are recognizing that. With regard to the programming side, yes, our costs were below what we expected. We had an NHL rebate and some delays in channel launches or network launches, however we do expect double-digit increases in the out half of the year and we expect to be come in on the year at about 10%. The costs are driven by sports programming, retrends and getting more rights across more platforms which we’re able to leverage into more value, in a better value proposition for the customer.