Comcast has hit an important milestone: The media conglomerate told investors on a quarterly earnings call this morning that it now has more subscribers for internet service than cable TV. “So broadband has, in fact, surpassed video in terms of the number of subs,” Neil Smit, Comcast’s cable boss said on the call. Here’s what that looks like through the last quarter:
Comcast didn’t quite get there in the first quarter of 2015. The numbers released this morning show it still had a few thousand more cable video subscribers than broadband subscribers at the end of March, but the lines have crossed since then. Regardless, the trend is unmistakeable: Television service is a declining business, while internet service represents Comcast’s future.
Cable communications—cable TV subscriptions and broadband internet access – are easily Comcast’s most important business, accounting for more than three quarters of its operating cash flows in the March quarter, the earnings show. In terms, of revenue high-speed internet was up 10.7%, outpacing a 3% rise for cable TV. Internet service is also a higher margin business than TV.
But continued growth for its broadband services may not be that straightforward. Comcast was recently forced to walk away from a plan to acquire the second biggest player in its industry, Time Warner Cable, when it became clear the government would not waive the deal through. The US Justice Department seemed to indicate its chief concern was the company’s dominance in broadband internet—not cable. The government said in a statement it had “significant concerns that the merger would make Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers.”
Of course, Comcast does own a host of media assets including broadcast network NBC, the Universal Film studios business, a bunch of cable networks (MSNBC, USA Network) and some theme parks. There has been speculation it could shift its focus back to content companies with publisher Vox Media and even Netflix (somewhat mischievously) both mentioned as potential acquisition targets.