It’s not hard to make a bearish case for Comcast (CMCSA). More and more competitors are offering digital-video options, flooding into a market created by technological advancements that have changed the way we consume media, cautions Richard Moroney, editor of Dow Theory Forecasts.
Government regulation is another issue. The Federal Communications Commission’s Title II enforcement has stepped up regulation of the broadband industry.
Over the long haul, digital media is a real threat to the traditional pay-TV business. However, Comcast is adjusting better than many people expected, offering its own on-demand services and dipping a toe into alternative distribution methods.
Perhaps the company’s biggest hedge against a digital world is its massive library of programming. Meanwhile, despite concerns about cord-cutting, Comcast added 161,000 video customers in 2016, its strongest gain in a decade.
To round out its traditional media business, the company also added 385,000 internet customers and 44,000 voice customers in the quarter.
Comcast’s quarter-to-quarter growth will always be somewhat lumpy, for reasons both predictable (Olympics and election-related advertising) and unpredictable (theme-park expansions and the varying success of feature films).
But the company’s ability to adapt gives us confidence that Comcast will deliver double-digit growth in long-term profits.
