康卡斯特 (CMCSA) 2026 年第三季財報電話會議：Peacock 獲利，自由現金流 42 億美元

重點摘要

• 康卡斯特 (Comcast) 公布 2026 年第三季形式營收持平，調整後 EBITDA 年增約 1%。調整後每股盈餘 (EPS) 為 1.07 美元，自由現金流達 42 億美元。
• 網路連接與平台業務 (Connectivity & Platforms) 持續承壓：營收下滑 2.6%，EBITDA 下降 4.4%。康卡斯特流失 14.4 萬名寬頻用戶，但增加了 36.8 萬條無線通訊門號。
• Peacock 連續第二個季度實現獲利，產生 2.61 億美元的 EBITDA。營收成長 34%，季末用戶數達到 4,800 萬。
• 媒體業務營收成長 13%，EBITDA 增加超過 5 億美元至 7.69 億美元。國際足總世界盃 (FIFA World Cup) 的轉播在第三季帶來 2.24 億美元的增量廣告營收，累計達 6.64 億美元。
• 主題樂園營收下滑 4%，EBITDA 下降 17%，主因奧蘭多需求疲軟，以及與中國相關的旅遊限制影響了日本市場。管理層預期將在 2027 年下半年恢復成長。
• 康卡斯特預計在 2026 年第四季列支超過 10 億美元的費用，主要與其營運和成本轉型計畫有關。包含 NBC環球 (NBCUniversal) 與 Sky 的拆分計畫仍在按時推進，預計於 2027 年年中完成。

核心財務數據

業務與營運表現

寬頻與無線業務融合

康卡斯特在本季流失了 14.4 萬名寬頻用戶。管理層將此歸因於激烈競爭、部分市場中積極的光纖促銷方案，以及為數異常龐大的老客戶剛好結束為期兩年的優惠價格期。

寬頻使用量持續年增約 10%。康卡斯特的寬頻客戶群中，約有 45% 訂閱了吉位元 (Gigabit) 以上的高速方案，比去年同期提升了近 10 個百分點。

無線通訊仍是網路連接與平台業務內的主要成長領域。康卡斯特淨增 36.8 萬條無線門號，季末門號總數達到 1,060 萬條，年增 18%，兩年間成長 40%。無線業務滲透率達到住宅寬頻用戶群的近 18%，佔康卡斯特服務覆蓋區內潛在無線門號總數的約 7%。

無線服務營收成長近 15%。獲得免費無線門號的客戶中，約有 70% 轉為付費客戶。高階吃到飽方案約佔後付費手機用戶的 40%，高於上一季的 30%，而高階客戶約佔總手機用戶群的 25%。

企業服務

企業服務營收成長 2.7%，EBITDA 成長 1.7%。小型企業營收大致持平，競爭壓力被行動通訊、備援連接及安全產品的採用所抵銷。

在先進連接、託管網路及安全服務需求的支撐下，企業解決方案仍是該部門的主要成長動力。管理層表示，整個企業服務營收每年創造近 60 億美元的 EBITDA。

Peacock、媒體與廣告

Peacock 錄得 2.61 億美元的 EBITDA，標誌著其連續第二個季度實現獲利。營收成長 34%，其中發行/分銷營收成長 44%，廣告營收成長 23%。

Peacock 期末用戶數達 4,800 萬。管理層表示，儘管本季稍早實施了調價，但訂戶數量環比仍保持穩定。

Telemundo 與 Peacock 轉播的國際足總世界盃在第三季創造了 2.24 億美元的增量廣告營收，第二與第三季合計達 6.64 億美元。管理層表示，在扣除世界盃及賽事場次差異的影響後，整體廣告環境相對穩定，科技領域的強勁表現抵銷了消費類別的疲軟。

片場與主題樂園

片場業務營收因低利潤率電視授權交易的時間點問題而下滑 1%，但院線票房營收成長 77%，片場 EBITDA 成長 19%。管理層指出，環球影業 (Universal) 成為 2026 年首家全球票房突破 50 億美元的製片廠。《奧德賽》(The Odyssey) 在全球締造 18 億美元票房，成為環球影業史上最賣座的電影。

主題樂園營收下降 4%，EBITDA 下降 17%。6 月開始的奧蘭多需求疲軟持續至第三季，而與中國相關的旅遊限制拖累了日本樂園的入場人數與財務表現。

康卡斯特正調整奧蘭多的行銷與促銷方案，同時致力於提升史詩樂園 (Epic) 的設施可用率、吞吐量與營運可靠性。管理層表示，奧蘭多的入場人數、遊客消費及財務表現仍顯著高於兩年前的水平。

管理層展望

• 康卡斯特預計 2026 年第四季網路連接與平台業務的基礎財務趨勢將有些許改善，即便公司持續將寬頻用戶轉移至新的價格與套餐方案並提供免費無線門號。
• 該公司預計第四季將列支超過 10 億美元的費用，主要與旨在支援 2027 年倡議更快啟動的組織及成本轉型措施有關。
• 第三季自由現金流中所包含的時間性有利效益預計將在第四季回轉。
• 管理層預計日本主題樂園業務將在第四季開始走出旅遊限制最初帶來的壓力基期。好萊塢樂園應可受益於全新的《玩命關頭》(Fast & Furious) 雲霄飛車，但奧蘭多需求疲軟與高基期的挑戰預計仍將是逆風。
• 主題樂園的表現預計將在 2027 年逐漸增強，管理層目標是在下半年恢復成長。管理層也提醒，復甦過程可能不會是線性的。
• Peacock 的單季獲利能力可能會因內容版權費用的支出時間點而有所波動，但管理層預計年度獲利能力將隨著時間持續改善。
• 包含 NBC環球與 Sky 的拆分計畫按原定時程推進，預計於 2027 年年中完成。
• 康卡斯特預計自 7 月 1 日起生效的股票回購暫停計畫將至少維持至拆分完成為止。

風險與關注焦點

• 固定無線存取 (FWA) 競爭依然激烈，而光纖建設熱潮與促銷定價持續為寬頻用戶數的趨勢帶來壓力。
• 康卡斯特提到部分市場中光纖吉位元 (Gigabit) 服務的價格低至 30 至 40 美元，並表示此類定價可能難以持續。
• 舊有寬頻優惠方案到期導致第三季客戶流失率上升，對客戶留存率及 ARPU（每用戶平均收入）帶來持續壓力。
• 主題樂園面臨奧蘭多近期需求疲軟、總體經濟與地緣政治的不確定性、史詩樂園 (Epic) 的營運載客容量限制，以及影響日本的旅遊限制。
• 由於體育賽事與其他內容版權費用的時間點差異，Peacock 各季度的獲利表現可能仍極不平均。
• 公司的重組需要強大的執行力，在轉型效益更加明確之前，預計第四季將列支超過 10 億美元的費用。

分析師問答亮點

• 寬頻競爭：管理層表示，競爭強度在進入第四季後依然居高不下，且並未將近期產業提價視為趨勢的明確改變。康卡斯特計劃維持定價紀律，同時強調產品差異化與客戶體驗來進行競爭。
• 無線業務成長空間：管理層認為，在目前僅佔可服務無線門號 7% 市佔率的情況下，仍有巨大的成長空間。其首要任務是將免費門號轉換為付費方案、提高多門號採用率，並擴大高階方案的占比。
• Peacock 合作夥伴關係：康卡斯特將其 YouTube Premium 隨行組合包視為吸引年輕增量受眾的方式，同時限制對其直接面對消費者 (DTC) 客戶群的蠶食。管理層對更多組合包及分銷合作夥伴關係保持開放態度。
• 成本轉型：該倡議旨在精簡組織結構、加速決策，並為成長型投資創造空間。潛在領域包括無線業務、先進企業服務，以及利用康卡斯特網路基礎設施的長期邊緣運算機會。
• AI 與客戶服務：康卡斯特表示，透過與 Sierra 和 Cresta 合作，人工智慧已部署於網路營運與客戶互動中。客服聯絡率下降了約 20%，今年至今相較於去年減少了超過 3,000 萬次服務互動。
• 奧蘭多復甦情況：管理層預期目前的疲軟狀況將持續至第四季及 2027 年上半年，之後比較基期才會開始緩和。行銷調整、新套餐方案及史詩樂園 (Epic) 的營運改善旨在支援復甦。

法說會逐字稿全文

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完整財報電話會議逐字稿

管理層陳述

Operator

Good morning, ladies and gentlemen, and welcome to Comcast's Third Quarter Earnings Conference Call. [Operator Instructions] Please note 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 Steve Croney. 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..

Michael Cavanagh

Thanks, Marci, and good morning, everyone. Let me start with an update on the separation of NBC and Rosaland Sky. We are on track to complete the transaction by the middle of next year and are well into the execution phase, which includes building the stand-alone public company infrastructure and I'm pleased that Chris Halpin has joined us at NBC Universal's CFO, as we announced earlier in the quarter.

While there is still significant work ahead, we have a clear path to completion and remain focused on creating 2 companies with the strategic flexibility, financial strength and leadership to compete and grow independently. And we have tremendous confidence in the future of both companies. Each has significant structural advantages, a strong competitive position and substantial opportunities for long-term growth and value creation.

I want to spend a few minutes highlighting what gives us that confidence. At Comcast, we have been operating in an intensely competitive environment for some time. Fixed wireless remains aggressive and continues to take share, while fiber construction remains elevated with pockets of irrational pricing and promotional activity. And while satellite is not yet a material factor, we recognize the importance of anticipating emerging forms of competition and positioning our business to respond as the market evolves.

This quarter's financial results reflect the significant investments we're making to strengthen our competitive position. including fundamental changes to our pricing, packaging and overall customer proposition. These investments are creating near-term financial pressure but we believe they are necessary to strengthen customer relationships and position the business for a return to growth over the long term.

Importantly, we have a set of structural advantages that are difficult to replicate. Our focus is on fully capitalizing on these strengths through better execution and improved customer experience and a more agile operating model. Our capital-efficient network is the foundation of our best-in-class WiFi experience and the products and services we build around it. That leadership continues to be validated by independent third-party testing with Xfinity ranked #1 nationally for consistent quality, download speed and video experience and recognized for the most reliable WiFi in our footprint.

We're extending that leadership through network virtualization and upgrades to multi-gigabit symmetrical speeds delivering even greater capacity, speed and reliability at attractive economics. We're bringing the same commitment to excellence to the customer experience. The changes we've made are simplifying how customers interact with us and making it easier to do business with Comcast.

We're seeing encouraging results with NPS improving both sequentially and year-over-year. As build on this progress by delivering greater value and a more seamless experience, we believe we can better translate our product advantages into stronger customer loyalty and retention. Wireless gives us a powerful competitive advantage in a market substantially larger than broadband.

We are the challenger with a capital-light model that avoids the spectrum and network costs of traditional wireless operators while leveraging our broadband and WiFi leadership to deliver compelling value. And with approximately 90% of Xfinity Mobile traffic traveling over WiFi, we're able to leverage our existing infrastructure to deliver a great wireless product at highly attractive economics.

Importantly, convergence also strengthens our core broadband business by deepening customer relationships, reducing churn and increasing customer lifetime value. And we're able to generate an attractive return across both businesses without meaningful incremental capital investment. We believe we have the best hand in convergence with significant opportunity to expand our position in wireless.

And in Business Services, we've built a highly profitable business, generating nearly $6 billion annually in EBITDA with substantial opportunity ahead, particularly in enterprise, where we're taking share in a market dominated by legacy providers by delivering more flexible, integrated solutions to increasingly complex customer needs. Our network and established small business presence provide a strong foundation, but our talented sales force is a real differentiator.

Combined with our expanding portfolio of advanced networking, security and managed solutions, we're deepening customer relationships, capturing more of their technology spending and extending our reach well beyond our network footprint. We're already seeing the results with solid enterprise revenue growth and increasing adoption of advanced services. But these advantages alone aren't enough. The competitive environment demands that we execute at a higher level, move faster and operate more efficiently. That's exactly where the team working closely with Michael Angelakis as he prepares to become Comcast's CEO next year is focused.

We're taking decisive steps to change how we operate, structurally improve our cost base and create greater capacity to invest in growth. Building on the organizational changes Steve has made, including strategic external hires, we've embarked on the most significant operating and cost transformation in our company's history with an opportunity we believe will ultimately amount to billions of dollars over time. This goes well beyond cost savings. We're challenging established ways of working and redesigning how we make decisions, allocate resources and run the business to create a more agile, efficient organization that can compete more effectively and invest more decisively in growth.

Taken together, these advantages and the significant changes underway give us confidence in Comcast's ability to compete more effectively and create meaningful value for shareholders.

Turning to content and experiences. We're equally confident in the future of NBCUniversal and Sky. We have an exceptional portfolio of businesses, a strong competitive position and significant opportunities for long-term growth and value creation, and there are several reasons why we believe we are so well positioned.

First, we operate an integrated model across some of the most attractive and fastest-growing segments of media and entertainment. At the center are our industry-leading film and television studios own to iconic franchises that fuel creativity and innovation across our businesses. We're also 1 of only 2 globally scaled theme park businesses welcoming millions of guests annually and bringing our stories and franchises to life through immersive experiences.

Our media business anchored by NBC and Peacock reaches more than 100 million U.S. households each quarter while Sky extends our scale internationally through a leading European media platform with deep direct-to-consumer relationships and premium sports, news and entertainment offerings, further strengthened by the proposed acquisition of ITV.

Finally and importantly, we also have limited exposure to areas facing greater secular pressure, including linear pay TV networks. Second, we are a natural home to the world's best creators, talent, IP and fandoms. We attract the world's leading creators and storytellers. Across film and television, we have built an extraordinary collection of enduring franchises from Jurassic, Despicable in Minions, Trek and Fast and Furious to Law and Order, One Chicago, Love Island and Dalin. This extends to live programming -- we have 1 of the strongest sports portfolios in the industry, including the NFL, NBA and WNBA, MLB, Big Ten, Olympics and Premier League.

Beyond sports, iconic live events such as Saturday Night Live, the Macy's Thanksgiving Day Parade, and Bravo signature programming bring audiences together at scale. Creators, talent and partners choose to work with us because they understand and value our ability to develop IP, build fandoms and extend successful franchises across film, television, streaming, live programming and theme parks.

Third, our open architecture approach is a real competitive advantage. Fragmentation and diversity are the reality of the media and entertainment landscape, though 1 company can serve every consumer with everything. In that context, we believe being a closed shop or walled garden serves both the company and consumers poorly. Our core strategy is to combine our exceptional content and distribution with select partners and third-party IP to reach audiences wherever they choose to engage.

You can see this in our recently announced bundle with YouTube, which will expand Peacock's reach and accessibility while introducing our content and brands to a new and younger audience. It's also reflected in our theme park partnerships with franchises like Nintendo, Pokemon and Harry Potter, where we bring some of the world's most beloved IP to life through immersive experiences.

Finally, we intend to enter this next chapter with a strong investment-grade balance sheet enabling continued investment in our brands, content, technology and experiences while preserving the financial capacity to capitalize on future opportunities.

Combined with our diversified revenue streams across advertising, subscriptions, licensing and experiences, we believe we are positioned to drive long-term growth and value creation.

Now reflecting on this quarter, in media, Peacock was profitable for the second consecutive quarter and ended the period with 48 million subscribers. We also delivered the highest rated Spanish-language World Cup in U.S. history across Telemundo and Peacock. In Studios, Universal reached another significant milestone this quarter, becoming the first studio this year to suppress $5 billion at the global box office, led by an exceptional slate that included the Odyssey, which became the highest grossing film in the studio's history.

Finally, in Parks, we remain confident in the long-term outlook for this business. our powerful IP differentiated attractions and world-class destinations position us well for long-term growth. While we continue to see near-term demand pressure across portions of the parks business, including in Orlando and certain international markets, we view these trends as temporary rather than structural due to the confidence of a few factors. In addition to the macroeconomic and geopolitical headwinds we have referenced in the past, we believe 2 other factors have contributed to this recent softness.

First, we believe competitors were quicker to anticipate and recognize softness in demand and adapt their marketing strategies. And second, we continue to work through capacity challenges and ride throughput at Epic given the complexities of opening the most technologically advanced theme park ever built.

We are taking action to address both of these challenges. Additionally, we are investing in our management team. Earlier this month, we announced a new Chief Brand and Commercial Officer, Luc Bondar, who joins from United Airlines and started this week, and we just announced that Randy Culbertson, who until recently served as NBCUniversal's CFO, will also be joining Universal destinations and experiences as Chief Business Officer. The fundamentals of the business remain strong and Orlando attendance, guest spending and overall financial performance will be materially above where they were 2 years ago and guest satisfaction continues to rise.

Looking ahead, we expect performance to strengthen as we move through 2027 with a return to growth in the second half of the year. While the path may not be linear, particularly given the broader operating environment, we remain confident in the underlying strength of the business. And in closing, as we prepare for our next chapter as an independent public company, we believe NBCUniversal is exceptionally well positioned for long-term growth and value creation.

With that, I'll hand it over to Jason.

Jason Armstrong

Thanks, Mike, and good morning, everyone. I'll start with an overview of our consolidated results before turning the performance of our businesses. On a pro forma basis, third quarter revenue was flat, while adjusted EBITDA increased approximately 1%. The adjusted earnings per share were $1.07. We generated a strong $4.2 billion in free cash flow in the quarter. Let me now get into more detail on our businesses, starting with connectivity and platforms. Mike outlined the scale of the transformation ahead and the significant opportunity we see to strengthen our competitive position and unlock the full potential of this business.

I want to build on that by highlighting 3 priorities where we're taking decisive action to change how we operate, structurally improve our cost base and create greater capacity to invest in growth. First, we are fundamentally redesigning our organization. We've already made important leadership changes across customer experience, growth and marketing. We're simplifying our organizational structure to move faster improve execution and operate more efficiently. As part of this transformation, we do expect to take a significant charge in the fourth quarter. I'll have more on that in a minute.

Second, we're accelerating our technology transformation, product innovation and AI adoption. We're bringing in new technology leadership to increase the pace of innovation. AI is already embedded across our network to optimize performance, and we're expanding its application across customer experience through partnerships with Sierra and Cresta. These capabilities are central to our new operating model. enabling us to bring products to market faster, simplifying customer interactions and deliver a better experience more efficiently.

We've already reduced customer service contact rates by roughly 20% and eliminated more than 30 million service interactions year-to-date versus the prior year. And as personal AI agents reshape how consumers discover, purchase and manage services we're positioning Comcast to capitalize on that shift. In a consumer agentic world, it's logical that differentiation is a key to success, and we've got a culture of innovation pointed at just that.

Third, we're sharpening our focus on retention. -- delivering more value and then customers more reasons to stay with us. We've reduced historical pain points around promotional pricing expirations. We've invested to increase awareness of our wireless product and now we'll push wireless relationships even deeper. Our free line strategy has been a key tool in building awareness, but we're now positioned to push further on multiline customers, premium plans and new device offerings, which meaningfully reduce churn and strengthen the overall relationship. And we'll continue to innovate with new products and features like Xfinity Shield, which we launched this quarter.

We see home security, protection and cyber as a category we can reposition for the benefit of the broader relationship. While significant work remains, confident these actions will strengthen our competitive position, improve operating efficiency and unlock greater earnings and cash flow potential for the long term. Between the internal and external changes that are underway, it is our intention to provide more context early next year with Michael Angelakis joining us at that point to discuss in detail.

Now let me turn to the results of the quarter. Our performance continues to reflect the financial impact of the go-to-market changes we've made over the past year, including simpler pricing and packaging, an improved customer experience and deeper convergence through wireless. As expected, these investments continued to pressure near-term financial results with revenue declining 2.6% and EBITDA declining 4.4%. But as the quarter demonstrated, we're beginning to see modest improvement as we lap our initial investments and convert free wireless lines into paid relationships.

In the third quarter, year-over-year declines in convergence ARPA and broadband ARPU narrowed sequentially by 190 basis points, respectively, while the connectivity and Platform's EBITDA decline narrowed by 140 basis points. We're also seeing encouraging operational indicators. NPS improved again year-over-year, reflecting stronger customer perceptions of our service experience, and approximately 45% of our broadband base is now on gig plus speed tiers, up nearly 10 percentage points from a year ago.

Looking ahead, we expect further slight improvement in these underlying financial trends in the fourth quarter even as we continue migrating broadband customers to our new pricing and packaging and offering free wireless lines. Convergence remains central to our strategy with a focus on increasing wireless penetration to grow the value of our broadband relationships. Convergence revenue and ARPA remain key measures of our progress. In the quarter, convergence revenue declined 2% and convergence ARPA declined 0.5%, reflecting continued pressure on broadband revenue, partially offset by nearly 15% growth in wireless service revenue.

Turning to customer trends. We lost 144,000 broadband subscribers and added 368,000 net wireless lines in the quarter. As Mike highlighted, competition remains intense with particularly aggressive fiber promotions in certain markets during the quarter. At the same time, we had a higher than typical volume of customers facing pricing transitions across our legacy broadband customer base. Together, these dynamics contributed to higher churn and year-over-year pressure on both broadband and wireless subscriber trends.

In response, as I mentioned earlier, we've been refining our offers and retention strategies to better manage these transitions and strengthen customer retention. On wireless, we're continuing to make progress converting free lines into paying relationships and moving customers towards higher-value plans. Approximately half of our residential postpaid phone connects continued to come from customers taking a free line, and we're now converting 70% of those free lines into paying relationships. This is an important validation of our strategy to build a wireless awareness, move customers into paying relationships and drive upsell into multiline and premium wireless.

On that note, we're also seeing encouraging progress at the premium end of the market. Premium unlimited plans represented approximately 40% of our postpaid phone connects, up from 30% last quarter, and premium customers now account for roughly 25% of our phone base. This improving mix, combined with our opportunity to add more lines per household, positions us to deepen customer relationships and support convergence ARPA growth over time.

We ended the quarter with 10.6 million total wireless lines, up 18% year-over-year and 40% over 2 years. That represents nearly 18% penetration of our residential broadband base and approximately 7% of the total addressable wireless lines in our footprint.

Turning to Business Services. Revenue increased 2.7% and EBITDA grew 1.7%. In small business, revenue was essentially flat. And while we are seeing ongoing competitive pressure, we are offsetting this through uptake of additional products and services, including mobile, wireless connect for backup connectivity and security solutions like Security Edge, together, helping us increase the value of our existing customer relationships.

Enterprise Solutions remains the primary growth driver within business services, supported by healthy demand for advanced connectivity, managed networking and security solutions. Moving to content and experiences. There are a few items I'd like to highlight.

Starting with media. Revenue increased 13% and EBITDA grew more than $500 million to $769 million, driven by strong growth at Peacock. The World Cup on Telemundo and Peacock aired across both second and third quarters and generated incremental advertising of $224 million in the third quarter and $664 million in total.

Peacock was the primary driver of media results, delivering its second consecutive quarter of profitability with $261 million of EBITDA, a $478 million improvement year-over-year. Peacock revenue increased 34%, reflecting strong growth in both distribution and advertising.

Distribution revenue increased 44%, driven by higher sub fees and growth in paid subscribers, which increased by $7 million year-over-year.

Importantly, paid subscribers remained stable sequentially. The demonstrating strong retention, even as we began implementing a price increase earlier in the quarter. And advertising revenue grew 23%, driven by the FIFA World Cup, Love Island, which was the #1 streaming show this summer and 5-star weekend, our top scripted series. At Studios, revenue declined 1%, reflecting the timing of lower-margin television licensing deals. However, theatrical revenue increased 77%, contributing to 19% growth in Studios EBITDA. Our film slate delivered exceptional results led by Christopher Nolan's Odyssey, which generated $1.8 billion in worldwide box office to become Universal's biggest film ever; and Obsession, which set a new box office record for focus features and became the top grossing original film of 2026.

Turning to Theme Parks. Revenue declined 4% and EBITDA declined 17%, primarily reflecting continued pressure in Orlando and Japan. In Orlando, the softness that began in June continued through the third quarter and was the primary driver of weaker financial results. And in Japan, China-related travel restrictions continue to weigh on attendance and financial performance.

Looking ahead, we expect to begin lapping the initial pressure in Japan in the fourth quarter, while Hollywood should benefit from the recent opening of the new Fast and Furious coaster. However, softer demand and difficult comparisons in Orlando are expected to remain headwinds to overall theme park results in the fourth quarter.

Now let me wrap up with free cash flow and capital allocation. But before I do that, as I said earlier, we expect to have a significant charge in the fourth quarter related mostly to our transformation efforts, and I would quantify that at over $1 billion. In the quarter, we delivered $4.2 billion of free cash flow, reflecting the underlying strength and cash-generating capacity of our businesses as well as favorable timing impacts that we expect to reverse in the fourth quarter.

We paid $1.2 billion in dividends to shareholders. As previously announced, we paused our share repurchases as of July 1 and expect that pause to remain in place at least through the separation, as we ensure both businesses are positioned with strong balance sheets and investment-grade ratings. Our priority is to provide the financial flexibility for both companies to pursue their respective growth strategies for the long term.

With that, let me turn it back to Marci for Q&A. Marci?

Marci Ryvicker

Thanks, Jason. Operator, please open the call for Q&A. .

Operator

[Operator Instructions]

Our first question is coming from Craig Moffett from MoffettNathanson.

分析師問答

Craig Moffett

A question for Jason. I guess, Jason, about a month ago, you talked about irrational competition. You mentioned it a short time ago in your prepared remarks as well. In -- just in the past, I guess, 2 weeks or so, we've seen AT&T raise prices pretty considerably. We've seen just about everybody now start to raise prices in broadband. I know it's very early days. But have those price changes that have happened in the market had any impact yet on the kind of results that you're seeing as the competition, I guess, to use your words, maybe becomes a little less irrational?

Jason Armstrong

Thanks, Craig. It's Jason. I'll start and Steve can chime in as well. I think if you rewind the clock, that's right, we were at a conference in September and highlighted what we thought was some irrational competition that we started to see at the end of the second quarter, soft sort of consistently through the third quarter. And I would tell you there's still pockets of it out there, certainly in the fourth quarter. I would generally characterize -- the environment is -- it's been competitive year. It's been more competitive in the second half than it had been in the first half for sure. as we step back, the irrational comment was we know what the cost of building fiber. We obviously do a lot of overbuilding and deploy a lot of this ourselves. So it's a $1,500 plus per home. Getting more expensive with construction costs up as you get into border suburban and rural areas, that the underlying cost structure of deploying fiber going up, against what we saw $30 to $40 pricing in specific markets in the third quarter.

As we look at the return profile of that, to us, that is a rational competition. A lot of people have asked us a subsequent question on our wireless strategy and sort of pointed the finger back at us and said, "Well, you guys are offering free wireless lines, isn't that irrational?"

I would just point out, we actually think we're competing very rationally in wireless. When we offer a free wireless line it is against 0 capital deployed. We don't have spectrum. We don't have towers. Our model is an MVNO model. To the extent people are using our network, engaging with us, they're converting into paying subscribers within a year to a very rational price point, we think. And then our goal is obviously to upsell them over time.

So I won't call the last couple of weeks is a real change in trend. I think it continues to be very competitive, but Steve can fill in some of the details as well.

Steven Croney

Yes, as we really assess the marketplace, we maintain that gig pricing at $30 to $40. In some cases, even less, it's going to be really hard to sustain. So as we assess the overall environment, we're going to continue to compete aggressively, but we're going to compete with discipline and really focus on differentiating our products, adding values or deepening our customer relationships and continuing to provide a great customer experience. So we're not giving our customers a reason to leave..

Marci Ryvicker

Thanks, Craig.

Operator

Next question is coming from Michael Rollins from Citi.

Michael Rollins

So keeping on the theme of broadband and conversions, curious, as you're at an 18% penetration of your residential broadband customers, is there a tipping point that you should all keep in mind that you can get to where that then starts to show meaningfully better performance in converged revenue and particularly in broadband as you keep building that scale of the bundle? .

Jason Armstrong

Yes. So I'll jump in there. We feel mobile remains a tremendous growth opportunity for us. It's a capital-light model. leverages our existing customer broadband base. We have WiFi leadership that helps with the offload, which enables us to create a great value proposition that's resonating with our customers, as you stated, at 18% penetration, 7% of lines there's a huge upside there. But similar to broadband, it remains competitive, that marketplace.

And we saw switching activity slow down a bit in the quarter with some of the new product offerings in the marketplace, some of the new converged offerings in the marketplace. But that being said, we still added close to 370,000 lines. And in 2026, it will be our best Mobile line net ad year in the company's history.

Now we look at it strategically how we're attacking the market, our free wireless offer has delivered on the intended objectives. First and foremost, it rallied the organization and really focus the organization on mobile and the value of convergence. Secondarily, increased awareness with our customer base, which was hugely important, and that has since driven adoption and expanded the wireless space.

And the great news is 70% of those customers are rolling to paid. And when we look at the dynamic of those customers, porting is very similar to a paid customer, usage is similar to a paid customer. Our premium mix is actually a bit higher in that free line base as we really leaned into the premium segment. average lines per account are a bit less, but the good news there is we continue to see those lines per account increase over time.

So really, really pleased with that strategy. As I touched on in into the premium strategy. If you go back a year or so ago, we weren't even competing in that marketplace. We're now connecting at about 40% attach and 25% of our base has a premium product, and that's really improving the quality of our mobile customer base, which is great. And now we're really focusing on investing in multiline attach and further deepening our relationships, which is hugely important. So I think, once again, back to that 7% number, we have a long runway ahead of us. and we really like the benefits we see in the broadband base when we do attach mobile.

Operator

Our next question is coming from John Hodulik from UBS .

John Hodulik

Maybe a couple of questions on Peacock for Mike. Obviously, strong profitability this quarter. Do you expect that to continue on a quarterly basis going forward? Anything you can tell us about sort of longer-term target margins? And then should we see an uptick in the overall profitability of the Peacock business when the YouTube agreement kicks in early next year?

Michael Cavanagh

Thanks, Jonathan. So we're very pleased, obviously, with what we've been of late with Peacock, holding our subs at $48 million this quarter. As Jason said, that's on the back of a successfully landed price increase that was so far successfully landed in the late in the summer. Then another profitable quarter. I think the quarters ahead are you get lumpy depending on when rights kick in for different properties. .

So not so much focused on profitability quarter-by-quarter. But I think if you start looking back prospective years on an annual basis on a look forward or look back basis, I expect us to continue to drive profitability in the business. for all the reasons we've been focused on and talking about. It's a great value. It's got an unbelievable portfolio of sports and successful path on bringing in Pan movies from Universal plus library plus originals. It's a formula that we like what we see.

It works in concert with what we're doing at NBC and Universal Studios. So it's a strategy that works well for us. And I think the thing that you mentioned separately was YouTube. So let me just come back to the states that we've been through. I think we just passed our sixth anniversary of Peacock and we did quite a good job, I would say, in the early years, focusing on building primarily direct-to-consumer customer base at high ARPUs. And that's been what you can see when you look at our results versus others.

We always thought there would be a point, and we're at that point recently where being bundling with others was going to be a part of the strategy for Peacock. And it goes back to my earlier comments about being open architecture and working with other partners in the ecosystem in a variety of different ways. And certainly, having Peacock bundled with others is part of that. You've seen us do things with Apple, Amazon and Walmart working on things with other bundles with others. But let me talk about YouTube for a second, which is going to be a bundled offering of YouTube premium with Peacock, another step in this strategy I just described. and what makes YouTube particularly attractive is that we already have a significant amount of NBC clips in content consumed there.

So there's an awareness of that. But those views are typically well familiar with our brands and franchises. They're not currently Peacock subscribers. So this bundle will give us another opportunity to reach a younger, an incremental audience and in concert with the YouTube main fandoms drive greater engagement around our content.

So it's -- we feel very good about the strategy there. And with YouTube as well, there was more to it than just the bundle with Peacock, we extended our linear portfolio distribution deal with YouTube TV, expanded some aspects of our advertising relationships with them and are looking at some international opportunities as well.

So we're very excited about the relationship with YouTube, and we'll talk more as we get into the new year, when we start to get ready to talk to investors about our excitement for the new NBC Universal. But yes, to your point, I think we would -- we are interested in doing this with others as well. Different bundles will be different for different types of partners but we're looking to do exactly what I said, which is make them additive to the business we've already built, be careful about cannibalization of our existing business and come up with win-win solutions given the power of our content that's embedded in Peacock. And that's resonating well in the marketplace.

Operator

Next question is coming from Jessica Reif Ehrlich from Bank of America.

Jessica Reif Cohen

I guess just maybe staying on NBCU, but moving on to advertising. Can you give us an update on what you're seeing in the overall market? Any flow-through benefits from the World Cup? And just a follow-up on Peacock. I asked this question in the quarter, but do you feel like you have enough scale and are there any other -- you've obviously just talked through the YouTube premium bundle. Any thoughts on other partnerships or bundling, which seems like the direction the industry has headed anyway?

Michael Cavanagh

Jessica, so on advertising, I'd say the environment when you normalized for World Cup and game counts in this quarter versus others say that the overall environment is stable, relatively stable. And mix in categories with some tech growth offsetting weakness in consumer-driven categories.

But overall, pretty stable and strength, obviously, around live programming and sports. And so our portfolio performs very well in that regard. I mean in terms of scale, I think as I just commented on Peacock, we have a strategy of bundling with others as well as building and investing in our own direct consumer. And that's working, and we are open to doing more of the same and it's key to the fundamental strategy of the new NBC Universal. But when you ask the question of do we have scale. I mean, I'd like to just make the point that have scale, as I talked about last time and earlier in these remarks.

When you think about scale in terms of our position in businesses, we are the #2 player, 1 of 2 in the global theme parks business. Obviously, 1 of the best film studios in the world, consistently in the top 3, and fundamentally strong position in sports, both at NBC Sports. As we mentioned earlier, in Sky Sports, a leading brand in reality with BRAVO and like I said earlier, limited exposure to areas facing the greatest secular pressure, which is Pay-TV networks.

And I would add to that, a very outstanding and stable leadership team. So I think we have the ingredients we need to pursue a strategy of growth and investing in what NBCUniversal and Sky together are going to be once we complete the spin.

Operator

Our next question is coming from Kutgun Maral from Evercore ISI.

Kutgun Maral

I was hoping to get more color on the operating and cost transformation plan. I know it's early days, but is there anything more you can share on how we should think about the financial implications beyond the Q4 charge, especially as we look to 2027 operating EBITDA and free cash flow trends. And importantly, I know this is not just a cost cut exercise, that's a reshaping of how you operate with the goal to reinvest in the business. So what can these reinvestments look like? Will this be about driving growth in areas like mobile or edge compute or maybe helping to reshape your ongoing go-to-market evolution, including maybe pricing contracts that impact ARPU? .

Jason Armstrong

I'll start. And I think you answered a lot of the question in your question, there are a lot of things we're focused on. So you're spot on. So what we said is we'll take a $1 billion-plus charge in the fourth quarter. that is to get ahead of cost actions that will facilitate sort of a fast start into 2027 as we get into some of these initiatives. But you're right to sort of more broadly frame this as a transformation exercise. We don't look at it as a cost-cutting exercise. This is the ability to simplify in order to move faster, to be more nimble in decision-making and I think really create capacity to invest for growth, whether it's the knowns, you talked about it. Steve talked about it, pushing into wireless. We've had the Freeline strategy. We're going to increasingly push into premium. We see a place for us in multi-line. So I think that's a big opportunity. Business services, which we haven't talked about. We've had a history of pushing into additional markets through advanced services and adjacent products across a continually expanding base. There's more opportunities to do that. So freeing up capacity to do more of that.

And then there's the other, perhaps more speculative things that things we got to go take our shot at and see what's real over time and have some growth drivers that are in addition to sort of what I just lay out. So you mentioned edge compute. That's a very good one. We're staring at that right now. We've got 1,400 sort of head ends out there. We've got 250 megawatts of capacity. We've got space, power, cooling, and capabilities along with high-density networks going into every 1 of these. So we think that's a big opportunity. I wouldn't put that in front of you super near term. But that's 1 thing we're investing in, obviously, to see what the opportunity is long term.

So as we think about all these, that's the opportunity around transformation, and it's obviously sort of strengthening our competitive position it is unlocking greater earnings and cash flow potential for the long term at it's core, but namely in the form of growth.

Operator

Our next question is coming from Sean Diffley from Morgan Stanley.

Sean Diffley

2, if I may. First, I wanted to hear how you're thinking about your overall pricing power in broadband? And do you think the rise of AI agents like muse could potentially impact the connectivity sector -- do you think it could be a deflationary force or an opportunity for you on both the customer acquisition and retention front, and then separate question, would you ever consider doing a wholesale partnership with a satellite player leveraging your CBRS spectrum and WiFi? Or do you think that would be too great of a risk to enable a potentially disruptive competitor down the line?

Jason Armstrong

Thanks, Sean. Let me start with pricing power sort of related to AI in an agentic world. Steve will pile on to that. And then I think Steve will take the partnership's question, as you mentioned, with satellite. So AI, we've -- obviously, there's been a lot of noise of this in the past months. It was coming at some point. It seems to have arrived. I think as you step back, there's sort of 2 layers of consideration in a consumer agenetic world. And the first is you have a product that consumers are using or engaging with less, and hence, the question might be, are they getting value? And AI agent might point that out and say, are you getting the right value? Do you still want the service? Or do you want to pay or could you pay less for the service? I think the connectivity industry, in general, is pretty well positioned there.

So if you look at rates of usage, broadband usage up 10% year-over-year pretty consistently that could be poised to accelerate more in an agentic world. We're actually really well positioned for that. By the way, the industry is pretty well positioned. If you look at the number of devices in particular that are hung off a local broadband network continues to move higher and higher every year. So the first principle and first question in a consumer agented world are customers getting more and more value out of your core product? Are they engaging with you more year-over-year? Are they using you more? The industry checks the box pretty well on that.

The second layer of consideration, I would argue, is probably within your product category, where are you on the scale of commoditization? Or do you have forms of differentiation that increasingly protects you again question. And so I think as you think about the things we've said over the course of the past year in terms of the transformation efforts, we are leaning heavily into the customer experience, right, whether that was addressing pain points and the pricing and packaging in addition to how do we lean into additional drivers of growth over time, where we actually think we can differentiate, right?

Wireless is a good 1 we offload at a higher rate, increasingly penetrate multilines. We do think we can reinvent as I mentioned, the home security, home protection category. So all these things offer layers of differentiation in a consumer agenetic world. But there's also ways we can play offense, right?

So if you look at where wireless is a great example. I think anybody looking to save money on their bill and agenetic world would likely point them to us in our territory. So there's ways we can play offense. But we're doing a lot on the ground. I would invite Steve to kind of comment sort of tactically everything we're doing in an AI world.

Steven Croney

Absolutely. And then you touched on the foundational elements, Jason, primary focus deepening the customer relationships, simplifying our interactions and improving the customer experience, not giving them a reason to leave. But if you jump in tactically, we've launched an agentic front end from Cresta for our assisted channels, which is really helping us effectively manage bought to human interactions and over time, also in partnership with Sierra, bot-to-bot interactions all this is supported by our personalized data models and off a recommendation engine, which really enables us to differentiate treatments, depending on the type of transaction and the specific customer.

And on top of that, additionally, we joined the recently announced personal Agent protocol group, and this was led by Sierra and Meta, and that's to develop standards for personal agents interacting with businesses, providing additional visibility and control. So we're really leaning into this. and we think we're well positioned as this continues to progress over time. And then to your second part of your question, today, we do partner with Starlink today in Comcast business.

We combine our connected managed connectivity portfolio with their satellite capabilities for our enterprise customers. And overall, we're very pleased with our MVNO partners, Verizon, T-Mobile, they're great. But as we've always shown, we're open to strategic discussions and partnerships that make sense for us.

Operator

Next question is coming from Michael Ng from Goldman Sachs.

Michael Ng

I'll ask a couple about parks First, it was encouraging to hear about Park's performance expected to strengthen throughout 2027. Just in terms of some of the factors that you called out on the Orlando side, when do you think we could see Orlando trends begin to improve? Will we have to wait until the lapping of those initial headwinds in June of 2027. And then anything you could share as it relates to kind of in-state out-of-state and international patients to Orlando. And then second, just on Hollywood, maybe just philosophically, like how do you usually think about the ROIs for new attractions like the fast coaster. Is that a capacity expansion and attendance opportunity? Is that a pricing opportunity? Just would love some thoughts around that.

Michael Cavanagh

Sure. Thanks, Michael. So I said a lot of this earlier, but let me add a little color. I think the -- we've seen the combination of macro effects in Orlando now economic softness that we talked about previously and sort of the lapping of the opening of Epic in 2025 around June of this year. So I think in Orlando, I'd expect to see the softness there, just trend similarly at least next quarter and in the year -- the first half of next year and start to lap from there.

We're not complacent about that. We're focused on the things we can control. So we've got a new head of marketing. So we're going to bring some promotional and product packages into the market, 3 park passes and the like, really focus on media investment on high return opportunities to get people into our collection of parks in Orlando.

Operationally, we're doing a lot of work. The team is doing well to make progress on Epic capacity, which is another talked about earlier to get reliability of attractions and availability, throughput, load times. That's a combination of just getting the tech settled down, getting the staff trained to load and unload at the right speed and the like, things that are just a challenge, a particular challenge given the sophistication of that park.

But we are going to continue to invest behind long-term growth in Orlando. Next year, we'll have fast attraction coming into the -- not Epic, but the other parks. So the whole campus will be an investment area for the future, the team's got lots of ideas, and it's an important market for us, and we'll be there when you step back and look at Orlando on a 2-year period, we've got a attendance per cap spending overall financial performance. They're all materially above where they were a couple of years ago and guest satisfaction continues to be strong.

So before I go into California, I mean, the point is we invest with a long -- these are long-duration assets. We're going to have these for decades and decades and decades. So once you're in one, you then move to what brings incremental attendance, refreshes the attendance that you're going to have, takes you above the baseline that you would otherwise have without that investment. And that's where something like the coaster in Hollywood comes into -- which I think is there's a natural level of what you'd call sort of I think of maintenance capital expenditure for parks you've already built. You see us and competitors that are good at this business do the same and you factor all that into your ROI calculations to make sure that you're getting the lift and it could be a combination of pricing and attendance. that you model out against what you hope to do.

And that coaster is fantastic, and we'll be bringing a version of it to Orlando. And satisfaction on that is some of the best we've seen in any attraction we have opened anywhere.

Marci Ryvicker

Thanks, Mike. Operator, we have time for 1 last question. .

Operator

Our final question today is coming from Sebastiano Petti from JPMorgan.

Sebastiano Petti

Just a quick follow-up. Jason, in your prepared remarks, you talked about I think there's a higher than typical volume of customers facing transition. Can you maybe just help unpack what that is. Does that pertain to the legacy customers? Is that new pricing and packaging customers? I just wanted to kind of double click on that.

Jason Armstrong

Yes. Thanks, Sebastiano. I'll start, and Steve can chime in as well. But what we're referring to there it's largely 2-year sort of promotional roll-off, which would refer back to our legacy. I think I highlighted that in the script, that has been a pain point for us. Obviously, we have in the last year and going forward, it's going to be on us to figure out how to increasingly inoculate that part of the basin mixture customers aren't rolling off step-ups. I think we've done a better job on that, but there's more to come. And so I highlighted that this quarter is we had an unusually high volume of those rolling off. In addition to what I've highlighted before, which is a very competitive environment with pretty aggressive pricing activity in the third quarter. .

Steven Croney

I think you covered it, Jason.

Marci Ryvicker

Brian is here, so I'm going to hand it to him for a few comments before we end the call. .

Brian Roberts

Let me just say, I think the team is doing a great job. Really, there's an energy and excitement with the proposed separation in both organizations. You've heard a lot of the plans today. I think we're on track. And we spent years building these businesses and as the industry transforms itself, we're meeting the moment.

And I think you've heard really good plans. The transformation plan really is underway. You can see it in broadband, while the market is super competitive, we're -- we've got, I think, a very intelligent remaking of our relationship with our customers, using technology to our advantage, having the best products and having a workforce that knows we're investing behind the business. And you look at the results in wireless, having our best year having a plan again in the future to now go to with only 7% of the lines. How do we rethink and now that we have 10 million-plus relationships and lines, how do we really step on the pedal there.

Business Services continues to be something we excel at. And we've got a large market differentiated from a lot of other companies in that regard with a great margin. Over at NBCUniversal, Mike has laid out really pleased with Peacock, what we've accomplished, excited about what we described with our open architecture and some of the relationships we're going to be able to have really gives us a unique place in the market working with hopefully everybody or many companies and a trusted partner just the other night, we launched the NBA season, and I think we had the highest ratings of any NBA opening night in their history with the way NBC Sports goes about and does these things. And of course, the Odyssey and the global box office success this year. And in parks, we're 1 of 2 with so many ideas that the team will go there and talk to them of what could happen over the next many years with the great Universal brand and attractions and creativity in the pipeline.

So lots to do. We have a discipline to our balance sheet and want to meet the moment head on and want to thank the team for what they've accomplished this quarter and look forward to doing it again.

Marci Ryvicker

Thank you for joining us, everyone. .

Operator

Thank you. That does conclude today's conference call. A replay of the call will be available starting at 11:30 Eastern Time today on Comcast Investor Relations website. Thank you for participating. You may all disconnect.