Comcast Corporation (NASDAQ:CMCSA) Q4 2023 Earnings Call Transcript

Comcast Corporation (NASDAQ:CMCSA) Q4 2023 Earnings Call Transcript January 25, 2024

Comcast Corporation beats earnings expectations. Reported EPS is $0.84, expectations were $0.8. Comcast Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning ladies and gentlemen, and welcome to the Comcast fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. Please note that this conference call is being recorded. I will now turn the call over to Executive Vice President, Investor Relations, Ms. Marci Ryvicker. Please go ahead, Ms. Ryvicker.

Marci Ryvicker: Thank you Operator, and welcome everyone. Joining us on today’s call are Brian Roberts, Mike Cavanagh, Jason Armstrong, and Dave Watson. I will now refer you to Slide 2 of the presentation accompanying this call, which can also be found on our Investor Relations website and which contains our Safe Harbor disclaimer. This conference call may include forward-looking statements subject to certain risks and uncertainties. In addition, during this call, we will refer to certain non-GAAP financial measures. Please see our 8-K and trending schedule issued earlier this morning for the reconciliations of these non-GAAP financial measures to GAAP. With that, I’ll turn the call over to Mike.

Mike Cavanagh: Thanks Marci, and good morning everyone. We’re less than a month into the new year and 2024 is already off to a great start. Two weeks ago, our entire company came together to make history, shattering records with the first exclusively streamed NFL Wildcard Game on Peacock. Nearly 23 million viewers watched the Kansas City Chiefs take on the Miami Dolphins, consuming 30% of all internet traffic in the U.S. and setting a new record in total U.S. internet traffic for any night. Our investment in the network and our technology platforms built over decades enabled us to shine, delivering a seamless experience on the internet and Peacock, demonstrating that our company is in an excellent position to win in this era of high bandwidth consumption.

Also, Universal Pictures’ Oppenheimer picked up five Golden Globe awards, including Best Picture, Best Director, Best Actor, Best Supporting Actor, and Best Original Score. With 2024 off to a terrific start, let’s look back at 2023, where we produced consistently strong financial results and continued to execute against our long term strategy. We’ve positioned our company to benefit from a significant number of scaled and diversified growth opportunities that are margin accretive, namely residential broadband, mobile, business services, theme parks, studios, and Peacock. In aggregate, our revenue in these businesses grew 8% in 2023 and comprised 55% of our total revenue for the year. Our healthy cash flow generation and strong balance sheet have enabled the organic investment that fuels these businesses and at the same time fund substantial capital return, including significant share repurchases.

All of this has translated into excellent financial performance. For the third consecutive year, we generated the highest revenue, adjusted EBITDA and adjusted EPS in our company’s history. Now let’s go deeper on some of the important achievements during the year. I’m really proud of the progress we’ve made in our connectivity businesses. We maintained a strong trajectory in Xfinity Mobile, increasing our subscriber lines by 24% and total domestic wireless revenue by nearly 20%. We also performed well in our business services segment, which grew full year revenue and EBITDA by nearly 5% with margins approaching 60%, and we exceeded our goal of adding over 1 million new homes and businesses passed and expect to do at or above this level in 2024.

Our domestic broadband business remains strong. We kept our very large and healthy base of subscribers flat while growing residential ARPU 3.9%, the high end of our historical range, driving solid EBITDA growth in connectivity and platforms and expanding margins to around 40% on an underlying basis. We achieved all of this despite an intensely competitive environment, and as I look back on 2023, I am confident that our strategy combined with excellent execution sets us up extremely well to navigate the road ahead. While the competitive environment is likely to remain at these levels for a period of time, broadband is still a very large, healthy and profitable market, and the consumption trends that we’re seeing are encouraging for the future.

Customers are connecting more devices in their homes and are using them for applications that require more capacity, faster speeds and lower latency. Our fiber-deep and capital efficient network is more than ready to meet this demand with 100,000 miles of fiber and a clear path to offering multi-gigabit symmetrical speeds ubiquitously across our entire footprint with DOCSIS 4.0. I’d like to spend a minute briefly addressing the government’s affordable connectivity program. First, it’s important to note that we’ve built on our decade-long history in digital equity to effectively participate in ACP and have successfully leveraged the national verifier program in the process. While we hope that the White House and Congress renew this funding and keep these important resources available to the many people and households who have relied upon this program to stay digitally connected, we have already begun to communicate with ACP participants and will provide a range of options, including our highly successful internet essentials program, in the event that funding is discontinued.

Shifting to content and experiences, we have positioned ourselves to drive long term profitable growth. Over the span of decades, we’ve built a remarkable portfolio of iconic content and strong franchises in both film and television, including live sports, news and entertainment. Our market-leading businesses have tremendous reach and continue to perform and execute collaboratively, playing to our strengths by leveraging our IP and our incredible partners. Let’s start with our studio group, where we hit a major milestone ranking as the number one studio in film by worldwide box office with hits such as Super Mario Bros., Oppenheimer, Fast 10, and Five Nights at Freddy’s. We are proud to work alongside our creative partners like Christopher Nolan, Chris Meledandri, and Jason Blum, who are innovative industry leaders to develop content that continues to delight audiences.

And I’m really excited about another fantastic film slate in 2024 with the latest installment of Kung Fu Panda in March, along with Despicable Me and Twisters in July, and Wicked slated for November, which will also benefit Peacock as these films and many others enter the Pay-1 window. At the same time, our media segment continues to deliver, reaching over 100 million households every quarter with leading sports, news and entertainment. We have the number one most watched news organization in the U.S. and Sunday Night Football is pacing to be the most watched prime time show for an unprecedented 13th consecutive year. Peacock continued to be the fastest growing streamer in the U.S., a result of our holistic business model which leverages all of our brands to serve a broad range of viewers by providing them with options to match their evolving habits.

In the short period of time since we launched in 2020, we’ve seen strong momentum, ending the year at 31 million paid subscribers at a $10 ARPU, supported by healthy trends in both engagement and churn, and I’m excited for 2024. We started with the successful Wild Card Game, which will soon be followed by Oppenheimer coming exclusively to Peacock and a full slate of both new and returning originals such as Ted, Peacock’s most watched original title, additional Pay-1 movies, and the Summer Olympics later this year. These next Olympic Games promise to be nothing short of spectacular with the return of fans, this time to Paris, one of the most beautiful cities in the world. With the NBC Broadcast Network airing more content than ever before and Peacock as the streaming home for all games, NBC Universal will be the most comprehensive Olympic destination in U.S. media history with Xfinity once again playing a huge role in delivering each game on our entertainment OS platform, which is now also available to charter customers through Xumo.

At parks, we achieved record-high revenue and EBITDA in 2023 and have exciting new attractions and experiences in the years ahead. We’ll open Donkey Kong, another Nintendo-themed land next year in Osaka, which will expand Super Nintendo World by another 70%. We expect continuation of the strong trends in Hollywood also driven by Super Nintendo World, and we’ll see the completion of Epic Universe, our fourth gate in Orlando, prior to its grand opening in 2025. In summary, we are very pleased with all that we have achieved in 2023. We have incredible teams in each of our businesses and have executed against our plan exceptionally well, delivering very strong EBITDA, EPS and free cash flow. Going forward, our highest priority is to continue our strong operational performance enabled by the investments we are making in our six key growth areas, fueling their growth and further improving the profile of our business mix.

The strength and stability of our company, including our balance sheet, enables us to make these investments while also providing our shareholders with substantial capital returns. Since we started buying back stock in late May of 2021, we have repurchased approximately 15% of our total shares outstanding, and with today’s announcement we have now increased our annualized dividend by 150% since I joined the company in 2015. Putting it all together, our strategy is working and we see many years ahead that this formula will continue to deliver for our company and shareholders. Jason, over to you.

Jason Armstrong: Thanks Mike, and good morning everyone. I’ll begin on Slides 4 and 5 with our consolidated results. Total revenue increased 2% to $31.3 billion for the fourth quarter and was consistent at $121.6 billion for the full year. On a reported basis, EBITDA was consistent at $8 billion for the fourth quarter and up 3% to $37.6 billion for the full year. Our EBITDA results include severance and other in this quarter, as well as in last year’s fourth quarter. Excluding these items totaling $527 million this quarter and $638 million in last year’s quarter, adjusted EBITDA decreased 1% in the fourth quarter and remained at 3% growth for the full year. Adjusted EPS was up 2% to $0.84 a share for the fourth quarter and increased 9% to $3.98 for the full year.

We generated $1.7 billion of free cash flow for the quarter and $13 billion for the full year, which translates into $3.13 in free cash flow per share, which was up 10% year-over-year, and we returned over 100% of this to shareholders, with $4.7 billion of capital returned to shareholders in the quarter and $15.8 billion for the full year. Our strong level of free cash flow includes the significant investments we’re making to support and grow our business in six broad and diversified growth categories, including residential broadband, wireless, and business services connectivity, along with theme parks, streaming and premium content at our studios. Taken together, these growth areas generated more than half of our total company revenue and grew at a high single digit rate during the quarter and for the full year.

Now let’s turn to our business results, starting on Slide 6 with connectivity and platforms. As a reminder, our largest foreign exchange exposure is to the British pound, which was up nearly 6% year-over-year. As usual, in order to highlight the underlying performance of the connectivity and platforms business, I will refer to year-over-year growth on a constant currency basis. Revenue for total connectivity and platforms was flat at $20.4 billion. Unpacking that, revenue in our core connectivity business – domestic broadband, domestic wireless, international connectivity, and business services connectivity, increased 7% to $11 billion, while video, advertising and other revenue declined 8% to $9 billion. Our strategy is to invest to drive growth in our core connectivity businesses while at the same time carefully managing businesses that are important, but face secular headwinds.

On balance, this is a favorable mix shift for the profitability of our overall connectivity and platform segment, as reflected in our results. EBITDA for total connectivity and platforms increased 3% with EBITDA margins improving 130 basis points year-over-year. This includes severance and other of $422 million in the quarter and $456 million of charges in last year’s fourth quarter. Excluding these items in both periods, EBITDA increased 2% to $8 billion and EBITDA margins improved by 110 basis points. Margins for our domestic legacy cable business improved 70 basis points to 46.2%. In terms of how our underlying performance in connectivity and platforms breaks out between residential and business, on the same basis excluding severance and other from both periods, residential EBITDA grew 2% with margins improving 120 basis points, and business services EBITDA increased 5% with margins nearly unchanged at an impressive 57%.

Now let’s get further into the details, starting with our connectivity growth drivers. Residential connectivity revenue grew 7% driven by 4% growth in domestic broadband, 15% growth in domestic wireless and 19% growth in international connectivity, while business services connectivity revenue grew 6%. Domestic broadband was once again driven by very strong ARPU growth of 3.9% for the quarter and for the year, landing at the high end of our historical 3% to 4% range while our base of 32 million broadband subscribers remained stable over the past year, including the 34,000 subscriber loss this quarter. We remain focused on competing aggressively but in a financially balanced way, as evidenced by this quarter and past years’ results. With the broadband marketplace remaining extremely competitive, we will continue to manage this balance and expect ARPU growth will remain strong within our historical range and continue to be the driver of our residential broadband revenue growth in 2024.

While we do not expect subscriber trends to improve in the coming quarters, we do expect them to improve over time. At the macro level, customers are consuming more, connecting more devices in their homes, and are using them for applications that collectively require either faster speeds, lower latency, and higher reliability over time. These secular trends are all moving in our favor, and we believe our marginal cost to add capacity to our network is unrivalled. This is why we are investing in our fiber-fed network to further increase capacity and offer multi-gig symmetrical speeds ubiquitously across our footprint and ensure that we stay way ahead of consumer demand with the best broadband offering and experience. We have deployed mid-splits to about 35% of our footprint and expect that to reach around 50% by the end of 2024.

On the back of this, we launched our first DOCSIS 4.0 market during the fourth quarter and will continue to launch additional markets this year. We are focused on what we can control – that means segmenting our customer base by offering our customers the right price, including value options at different speed tiers and driving ARPU ahead in an environment where broadband subscriber growth remains challenged, and we’re doing this in the context of aggressive network upgrades and expansion, putting us in a great position to eventually return to subscriber growth. Speaking of network expansion, we exceeded our goal of passing 1 million new homes and businesses in 2023, landing at nearly 1.1 million, and we plan to replicate this in 2024 with this level, or potentially even greater footprint expansion.

Switching to wireless, we hit a great milestone, eclipsing $1 billion in quarterly revenue for the first time this quarter. With the year-over-year increase due to higher service revenue driven by continued strong momentum in customer lines, which were up 1.3 million or 24% year-over-year to 6.5 million in total. This includes 310,000 lines we just added in the quarter. We’ve had a healthy run rate generating around 300,000 net additional lines per quarter for the last two years, and we’re consistently in the market testing new offers and will continue to do that throughout the coming year, with the goal that some of these offers will translate into accelerated line additions as the year progresses. With only 11% penetration of our domestic residential broadband customer accounts, we still have a big opportunity and a long runway ahead for growth in wireless.

International connectivity revenue increased 19% driven by steady mid-teens growth in broadband along with strong growth in wireless, which had healthy growth in both device sales and service revenue. Finally, business services connectivity revenue increased 6% driven by consistent growth in our small business category as we grew ARPU through rate and higher penetration of additional products like Security Edge, and from strong growth in midmarket and enterprise. The revenue growth in our connectivity businesses was offset by declines in video, advertising, and other revenue. The video revenue decline was driven by continued customer losses. The lower other revenue reflects similar dynamics in wire line voice, and advertising was impacted by a tough comparison to last year, which benefited from higher political revenue in our domestic markets.

As I mentioned earlier, excluding severance and other, connectivity and platforms’ total EBITDA increased 2% with adjusted margin of 110 basis points. To unpack this improvement, the main driver is the mix shift to our high margin connectivity businesses, a transition you’ve seen for the last few years and that we expect to continue. In addition to the mix shift, we are benefiting from ongoing cost discipline. For every quarter this year, including the fourth quarter, five out of six categories of expenses we report have decreased. The only category that grew is direct product costs, which are success-based and directly associated with the significant growth in our connectivity businesses. In addition, we continue to get more efficient with better tools and technology.

Compared to 2017, we reduced our domestic truck rolls by nearly 50% and customer interactions are down nearly 40%, even while we increased our domestic relationships by nearly 5 million over this same time period. The investment we are making in our network, including virtualization and using technology to enhance the customer experience, not only makes us more competitive, it makes us more cost efficient. Together, the mix shift, the cost discipline and the technology advances we’ve made in customer service are all structural, and we expect them to continue, positioning us to drive higher profitability and further margin expansion in 2024 and for the foreseeable future. Now let’s turn to content and experiences on Slide 7. Revenue increased 6% to $11.5 billion and EBITDA increased 2% to $923 million.

Excluding severance at $101 million this quarter and $186 million in last year’s fourth quarter, adjusted EBITDA decreased 6%, reflecting a decrease in media partially offset by strong growth at studios and record results at parks. Now let’s take a closer look at content and experiences, starting with media. Media revenue increased 3% driven by strong growth at Peacock, which was up 57% and, similar to wireless, crossed the $1 billion in quarterly revenue mark for the first time. Domestic distribution increased 9% driven by Peacock subscription revenue growth of 88% fueled by the continuation of solid growth in our paid subscriber base. We ended the quarter with 31 million Peacock paid subscribers, up 10 million over the past year, including 3 million net additions in the quarter driven by sports, including the NFL and the Big 10, and movies, notably the day and date movie, Five Nights at Freddy’s, and a variety of originals and other entertainment programming.

International networks revenue, which is mainly distribution revenue for Sky Sports, increased 17% primarily due to the increase in sports content this year as well as the positive impact of foreign currency translation. Finally, domestic advertising declined 7% due to a tough comparison to last year, which included a significant incremental contribution in advertising from Telemundo’s broadcast of the FIFA World Cup. Excluding the World Cup, advertising increased nearly 3% driven by strong Peacock advertising and from our strong sports line-up. Peacock advertising increased 50%, again excluding the World Cup, and hit an all-time high. Media EBITDA decreased 50% mainly due to higher sports costs, reflecting a full quarter of a contractual rate increase in our NFL programming, the addition of Big 10 to our sports programming line-up this year, and higher Premier League costs compared to last year when games were paused for four weeks to accommodate the timing of the World Cup.

At Peacock, EBITDA losses continued to moderate in the fourth quarter with nice year-over-year improvement resulting in full year losses for Peacock of $2.7 billion, which was slightly better than the expectation we had previously communicated. 2023 marked the peak in annual losses at Peacock, and for 2024 we expect to show meaningful improvement in losses versus 2023. Turning to studios, revenue increased 4% driven by theatrical revenue growth of 59% due to our performance at the box office this quarter with Five Nights at Freddy’s, Trolls Band Together, The Exorcist, and Migration. In fact, Five Nights at Freddy’s was the highest grossing horror film of 2023 and also set a record on Peacock as the most watched title of all time in the first five days of its release.

In addition to the films this quarter, we benefited from prior period titles moving through profitable licensing windows, driving EBITDA growth of 83% to $308 million. At theme parks, revenue increased 12% and EBITDA also increased 12% to $872 million for the quarter. These strong results were again driven by growth at our international parks, especially as Osaka continues to benefit from strong demand from Super Nintendo World driving higher attendance and per-cap spending relative to both last year and pre-pandemic levels. In Hollywood, we also continued to benefit from the positive consumer reaction to Super Nintendo World, which opened earlier in 2023, driving strong attendance and growth in per-caps and resulting in Hollywood’s best fourth quarter EBITDA in its history.

In Orlando, our results were also strong with attendance in line with 2019 pre-pandemic levels and revenue substantially ahead. Now I’ll wrap up with free cash flow and capital allocation on Slide 8. As I mentioned previously, we generated $1.7 billion in free cash flow this quarter and $13 billion for the year, and we achieved this while absorbing meaningful capital investments to expand our footprint and further strengthen our domestic broadband network, scale our streaming business, and support the continued build of our Epic Universe park ahead of its 2025 opening. As a result, total capital spending increased 13% for the year driven by higher capex. At connectivity and platforms, capex increased 1.5% for the full year, with capex intensity coming in at 10.1% primarily driven by investments to further strengthen and extend our network.

In 2024, we expect capex intensity to be in the same range as we continue to transition our U.S. network to DOCSIS 4.0 and accelerate our growth in homes passed. I’ll just note that while our capex intensity at connectivity and platforms has been around 10% for the past few years, this is not a specific internal target for us, rather it’s an output. Our teams are going as fast as possible; however, if for example we have an opportunity to accelerate further our growth in homes passed at accretive economics, then we’d welcome that opportunity. But right now, the envelope has been right around 10% and we’re very happy with the pace that we are on and the progress we’re making. Content and experiences capex increased by $1.2 billion for the full year, driven by parks with Epic accounting for the majority of the increase in spend.

In 2024, we expect parks capex to remain elevated and then decrease in 2025 when we open Epic. Working capital was $2 billion for the year, which was better than we expected, improving a billion over last year’s level. Our 2023 results included benefits from the pause in production during the work stoppages associated with the writers and actors strikes during the year. Turning to return of capital on our balance sheet, for the full year we returned a total of $15.8 billion to shareholders – this includes share repurchases of $11 billion, including $3.5 billion in the fourth quarter. In addition, dividend payments totaled $4.8 billion. As we announced this morning, we are raising our dividend by $0.08 a share to $1.24 per share – that’s our 16th consecutive annual increase.

We ended the year with net leverage of 2.3 times, in line with our target leverage of around 2.4 times, and we expect to remain at this target level in 2024. Wrapping up, we had a very solid quarter and a great year, and we’re focused on continuing to execute our long term growth strategy supported by our balanced and disciplined approach to capital allocation. I’m proud of the steady and consistent framework which guides our decision-making. We’re going to invest aggressively for organic growth across our six key areas. We’ll protect our balance sheet and cash flow position and return capital to shareholders. Now I’ll turn it over to Brian for a few remarks before we turn to Q&A.

Brian Roberts: Thanks Jason, and good morning everyone. I’d like to just emphasize a couple of points. As I think about the year, it’s hard not to be really proud of what we’ve accomplished. 2023 was the best financial year in our 60-year history, and we already have nice momentum in 2024. As Mike and Jason just outlined, we have a unique company that is incredibly well positioned. We always try to think about and invest for the long term, particularly across the six key growth drivers. What’s also important is that in 2023 alone, we returned $16 billion in capital to our shareholders. As you just heard, it’s the 16th straight year that we just raised our dividend – that’s consistency. When you put this all together, we have a great team – that’s always most important to me, and we’re making the right adjustments to our businesses to position us to win, grow, and continue to return capital to shareholders.

While there may be speculation on what we could do next, I’d like you to hear it directly from me: I love the company we have, so the bar continues to be even higher for us to do anything other than the plan you heard today. I want to thank all our employees for a great 2023 as they continue to execute at the highest level. With that, let me hand it over to Marci to take all your questions.

Marci Ryvicker: Thanks Brian. Operator, let’s open the call for Q&A please.

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Q&A Session

Operator: Thank you. We will now begin the question and answer session. [Operator instructions] Our first question is coming from Ben Swinburne from Morgan Stanley. Your line is now live.

Ben Swinburne: Thanks, good morning. Brian, thanks for those clear comments. I wanted to ask you guys about broadband and separately about Peacock. I guess Jason, you talked about and Mike talked about sort of the consumer trends that you think play to your strengths, but you guys are doing a lot at the network level, including in ’24 you talked about your converged offers that you’re testing maybe getting more aggressive. I know you’re not going to put a timeline on it, but can you talk a little bit about the opportunity to re-accelerate broadband customer trends, because the product you are bringing to the marketplace is seemingly getting better even this year, and I realize you’re talking long term, but I just wanted to hear more from you on the things you’re doing and the business and product today, and how that may or may not translate into better trends on the customer front over the course of the next 12 to 24 months.

Then on Peacock, I guess maybe for Mike, how much more investment does this business need? I think you guys had talked a while ago about getting to $5 billion of programming investment. If you look at the fourth quarter anyway, you’re basically there now, you’ve got good revenue momentum. I’m trying to think about the path to getting this business to breakeven, so I’d love to hear what you think the business needs in terms of incremental investment from here. Thanks a lot.

Dave Watson: Hey Ben, this is Dave. Let me start with broadband and then hand it over to Mike and Jason. On broadband, as Mike and Jason said, the environment pretty much remains the same – you know, there is still the macro activity, moves are down, but to your point, it is intensely competitive, especially the difference that has been there in this particular competitive cycle, it’s especially in the lower income segment, so the result of it is the main driver, customer activity, continues to be lower connects as churn remains near record lows, and despite this, we’re striking, I think, the right balance between customer growth and ARPU. We kept our sub base relatively flat, grew ARPU 3.9% for the quarter and the year, and so we’re also growing C&P but expanding margins.

Competitive cycles like this one, we’ve been through many, and what makes–you know, what happens during some of these cycles, there is new footprint, the competitive footprint, some unique discounting occurs. I think fiber is a pretty good example of one that we went through years ago and continue to have. There is pressure on net adds as you go through the initial phase of the cycle, but we evolved our approach and we have and continue to compete very well against fiber. I think this cycle is headlined by fixed wireless and really the emphasis on more of the lower income segment. They added new footprint, there’s some ARPU pressure, but we have and continue to adapt. The key for us through this cycle is continue to build better products, from the network to the Wi-Fi experience, and the network investments that we’re making are very consistent and we’ve laid it out – mid-splits, we’re pleased with our progress, we’re finishing ’23 33% upgraded, we’ll be around 50% by year-end ’24, and we’ve started to deploy 4.0 and our path towards symmetrical service offerings, so this is all due to where we believe strongly the market is going.

The market is going to have more devices that will be used and be hung on the network, and there will be more usage and engagement, so for the long run, we want to be in position to compete as things shift. We’re going to compete in a segmented way for every segment, and we’ll be aggressive in each one; but we don’t expect subscriber trends to improve over the coming quarters but we do expect to grow over time. We will compete aggressively and be in position when the macro environment shifts, and as we see with fixed wireless, there’s an opportunity and will be an opportunity to get more win backs. We want to be in position for that as well. Throughout it all, we’re going to protect the healthy base of 32 million broadband customers, managing rate and volume throughout.

Mike Cavanagh: Hey, it’s Mike, Ben. Thanks for the question on Peacock. I’ll expand a little bit on the question but get to it in terms of where we see programming going in the end. I’ve got to say, we couldn’t be prouder of what we accomplished with Peacock in 2023. To end the year with paying subs at 31 million, up 50% year-over-year, and that’s only three years in, we’re achieving a level of scale with paying subs that’s about 60% of the level of the streamers that have been out there for many years domestically, ex-Netflix. We’re holding a very strong ARPU at $10 per sub, so while it’s not the scale we ultimately plan to get to, I’ve got to say the team has done a fantastic job when lots questioned, could we even get this far.

From here, it’s really a matter of continuing to execute against the strategy that’s gotten us here, and that is expected, as we said earlier, to drive improvement in Peacock’s bottom line from the peak losses that we saw in 2023. When you really think about what that strategy is, it’s to manage Peacock and our linear TV businesses as one. The strategy really is to leverage the great relevant content properties we have, both at NBC which is news and sports and entertainment, obviously Bravo and some of the other assets we have in the cable business, and Universal with the Pay-1 window, so when you put it all together, continuing to execute against that. We’re going to look to get more scale, and the things we’re doing are both to drive more scale, more subs, but also get more engagement with the subs we have and drive improvements in churn, which we’ve been pretty pleased with.

To ultimately your question, where are we relative to–you know, leveling off a little bit of the growth rate of programming spend as we get to this level is clearly part of the improvement in Peacock losses standalone, that will be a factor as we see continued strong growth on the revenue side, given the higher level of subs and the expectation for continuing to add. But again, I would just say I’m less focused on what standalone Peacock losses are doing than I am on doing what’s right for the long term, for the totality of the media business, which is linear and streaming. I think we’ve navigated a very good path for us, so really pleased with what we’ve done.

Ben Swinburne: Thank you very much.

Marci Ryvicker: Thanks Ben. Operator, next question, please.

Operator: Thank you. The next question is coming from Craig Moffet from Moffet Nathanson. You line is now live.

Craig Moffett: Hi, thank you. I wonder if you could do an early post mortem on the Chiefs-Dolphins playoff game, what kind of subscription growth it drove at Peacock and what kind of early churn impact you’ve had on that. I know there was some chatter that you guys tried to play down about whether that amount of traffic load on the internet would have some impact on fixed wireless, but I’m wondering if you just have any observations about how other platforms handled the kind of the volume that that game drove in terms of traffic.