Good morning, ladies and gentlemen, and welcome to Comcast Third Quarter 2015 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 Senior Vice President, Investor Relations, Mr. Jason Armstrong. Please go ahead, Mr. Armstrong.

Thank you, operator, and welcome, everyone. Joining me on this morning’s call are Brian Roberts, Mike Cavanagh, Steve Burke, and Neil Smit. Brian and Mike will make formal remarks, and Steve and Neil will also be available for Q&A. As always, let me now refer you to Slide #2, which contains our Safe Harbor disclaimer, and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. In addition, in this call, we will refer to certain non-GAAP financial measures. Please refer to our 8-K for the reconciliation of non-GAAP financial measures to GAAP. With that, let me turn the call to Brian Roberts for his comments. Brian?

Thank you, Jason, and good morning, everyone. I’m pleased to report very strong third quarter results. This is a real reflection of how well the various parts of our business are working, and more importantly, how well they are working together. In the quarter, we grew revenue by a 11.2% and operating cash flow by 8.4%. Our performance was broad-based with broadband, business services, film, and theme parks leading the way. Over in Cable Communications, our investments in our network, our X1 platform, and customer service are all paying off. Revenue and operating cash flow growth were each over 6%. We added 156,000 customer relationships up over 90% from the prior year. Our video results were the best for a third quarter and nine years, and our broadband results were the best for a third quarter in six years. Similar to last quarter, churn was a standout, as we saw an improvement across every category. We continue to push harder on X1 and have now accelerated our deployment to over 40,000 boxes per day. Roughly 25% of our video subscribers now have X1, and the reaction from our customers together with the financial benefits that we’re seeing continues to indicate we should go even faster in taking that rate higher. Encouragingly, as we get further into our base, the magnitude of favorable impacts on churn additional outlets VOD viewing and DVR uptake remain at a high level. In addition, there’s a deep list of initiatives that are adding to our value proposition for our customers. Last quarter, we talked about launching a voice remote. To-date, we’ve already deployed nearly 1.5 million of them, and we’re confident that we have unrivaled content rights, which makes it much more important for us to facilitate the discovery of that content. The voice remote…

Good morning, everybody. Let me begin by briefly reviewing our third quarter consolidated financial results, starting on Slide 4. As Brian highlighted, consolidated revenue for the third quarter increased a 11.2% to $18.7 billion with consolidated operating cash flow increasing 8.4% to $6.2 billion. The primary drivers of this growth were high-speed data and business services at cable and film and parks at NBCUniversal. Earnings per share for the third quarter was $0.80, an increase of 9.6% when you exclude $724 million of tax adjustments and $49 million of transaction-related costs that were in last year’s third quarter results. Free cash flow for the quarter increased 6.8% to $2.7 billion, and free cash flow per share of $1.6 was up a 11.6%, driven by strong operating cash flow growth, partially offset by higher capital expenditures and cash taxes. On a year-to-date basis, free cash flow increased 13.5% to $7.3 billion, and free cash flow per share of $2.90 has grown 17.9%. Now, let’s go into the results of the businesses in more detail starting with Cable Communications on Slide 5. We are very pleased with the strength of our Cable Communications results. Cable revenue increased 6.3% to $11.7 billion, as we added 156,000 customer relationships and 90% improvement compared to last year’s third quarter, and increased total revenue per customer relationship by over 4% to $143 per month. These results demonstrate the strength and health of our business and were driven by strong growth and high-speed data and business services, as well as higher video revenue. Taking a closer look at our video business, third quarter revenue increased 3.3%, reflecting rate adjustments and an increasing number of customers adding advanced outlets and services like high-definition TV and DVR services. In fact, we added nearly 2.5 times the number of advanced…

Thanks, Mike. Regina, let’s open up the call for Q&A, please.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Craig Moffett with MoffettNathanson. Please go ahead.

Hi, good morning. Brian, I wonder if you could update us a bit on your thinking about wireless, and how it fits into the longer-term business plan? There has been reports this quarter about exercising the option for the Verizon MVNO, and where, I guess, about a month away from filing a short form for the 600 megahertz option. Could you just talk about this two things and what your thinking is at the moment for how wireless fits?

Well, we don’t have any news today. So let me say that, we believe that wireless obviously is an important area for consumers and how they are in the future. And today, we have incredible success with our Wi-Fi network, which is the largest in-home Wi-Fi network, as well as a terrific out of home Wi-Fi, we’re seeing a majority of bits travel over the Wi-Fi network. But it takes about six months to activate the MVNO. We’ve had told everybody that before, we were going to trial some things and test some things after we activate and we’ll update people as that progresses. But it’s an opportunity to take the network and the investments we’ve made – a successful investment that we’ve made, and try and see if we can continue relationships and product innovation that the team is working on. Regarding the auction, again, no news today. We’ve seen some of the opportunity for NBC in that part of the auction and certainly something that we’re likely to participate in and beyond that. We’re studying it, and we always look at all the options for the company, but we’re pretty excited about the roadmap that we’re trying to develop. Neil, anything you want to add?

I think, you covered it, Brian. We’re in the test and learn mode and I think is a natural part of the evolution of our country or participation in the mobile space beyond Wi-Fi. But we’re testing and learning and nothing new to report.

Would you think that longer-term an MVNO is a satisfactory end point, or would you think of it more as a starting point and then eventually you would want to have owner’s economics if you pursue that business?

We don’t know, we’re evaluating opportunities.

I think we’ve always felt it’s a part of a product set. I don’t think we feel that we have to necessarily in anyway seek owner’s economics. And just to clarify what I was – make sure it was clear, at the NBC side, we tend to participate, the cable side something we’ll continue to study.

All right. Thank you. That’s helpful, Brian.

Thanks, Craig. Next question please.

Your next question comes from the line of Ben Swinburne with Morgan Stanley. Please go ahead.

Thank you. Good morning, I’ll try two. Mike, can you talk about the leverage comfort zone for the company around that two times? In other words, how high would you go, if you saw something really compelling on the acquisition front, and how low would you drift before you would sort of default to buybacks, if you didn’t see anything out there? And then I will ask my second question to Neil. You guys talked a lot about X1 in the prepared remarks. Can you talk broadly about your customer segmentation that’s allowing you to put out kind of 2% customer growth every quarter, things like Internet Plus, Internet Pro, and I believe you’ve been testing a stream product that’s sort of pure over the top. Any color on sort of the ongoing customer segmentation activities and new product pipeline? Thanks. Thank you both.

Thanks, Ben. So it’s Mike. So on leverage, we used to say and I changed this in the last quarter that would be at the 1.5 to 2 times net leverage was the range that the company was drifting down towards from being at a higher level post GE. I think we sit now 1.9 times net leverage at the end of the third quarter. But as I said earlier, when you pro forma for the deal we did in the Japan Parks that takes us right at two times, feel quite good at around two times. But that gives us the ability to do all we need to do to return lots of capital to shareholders to invest in the business organically and give us some flexibility around things like Vox, BuzzFeed, parks and so forth. So in that range right around two is fine to allow us to do all that, and I won’t speculate on any larger M&A, as Brian said before, we’re pretty comfortable with the portfolio businesses we have.

Concerning segmentation X1 was up 60% of our connects this quarter, and so we’re seeing a healthy growth X1. We offer different products based on the segment, for example, the Internet Plus applies well to millennials who want a great Internet product and a lighter video product. On those customers we – after they’ve – after – the churn is consider we up sell about 30% of those. So we’re able to get new people into the system and then up sell or upgrade them. The on-campus product has been a great success. We are on 26 campuses now and continue to grow. It’s a great product. It serves the video to where the customer in this case, the student wants to have consume it, which is in their dorm room, we stream direct. We launched the stream product in the trial market and that also applies to millennials or younger audience. And finally Watchables we launched earlier this month, and that’s about 32 providers of semi professional content. So it’s getting to content that’s not normally what we’ve been carrying in the past, and we that will attract another segment. So we’re very careful on how we segment the audiences and we’re getting a better quality customer and holding on to them for longer.

Thank you.

Thanks, Ben. Next question please.

Your next question comes from the line of John Hodulik with UBS. Please go ahead.

Great. Thanks. It was for Neil. Can you comment on the strategy and timing of the DOCSIS 3.1 rollout? And if we look back, you’ve been adding about 1.2 million, 1.39 million new HSD subs per year for the last few years. Does this initiative sort of help you maintain that growth, or could we see some acceleration again on the sub side or ARPU, as you get further down the path there? Thanks.

Well, as you said, we’ve continued to add over 1 million for nine years now. And that we’ve done 16 speed increases in the past 13 years. So we continue to increase speeds and that’s the value that customers are receiving. We’ve also, as Mike mentioned in his comments increased the wireless gateways to our in-home Wi-Fi, is a very strong value add. The – in terms of DOCSIS 3.1, it’s what we have in the labs. We plan on rolling it out early next year, and we think that will give us more speed capability, and we’re also working on products that will increase the – let’s just call the smartness of the Internet, not just speed. So we think we can continue to grow market share and the market is growing only 70% of customers have a high-speed connection, so there’s market growth opportunity there as well.

Okay. Thanks.

Thanks, John. Next question please.

Your next question comes from the line of Jessica Reif Cohen with Bank of America Merrill Lynch. Please go ahead.

Thanks. I guess, two questions. First, can you talk about what you’re doing in terms of mining data and driving targeted more relevant advertising across all your platforms, so across Comcast Cable and also NBCUniversal businesses?

Well, let me start by just saying that, we see the two company – the two parts of the company working together is really part of what’s powering these earnings results and across the board. And one of the areas that we’ve identified as management team is that question, there’s a importantly how do we improve the technology, so we have a better targeted information. What’s the data that can assist the advertisers and the networks in having the right relationship with what they’re offering. And it’s an important area to the company because of both parts of the company have a lot of advertising dollars. It’s nice to see the spot market being very successful right now and supportive of this space. So I think there’s a lot of chance for us to perform well. The other thing with data is sort of measurement and having buyers be more knowledgeable to whatever means that that data gets to the marketplace. And so we’re looking at all those opportunities across the company. Steve or Neil, you please jump in?

Well, our advertising group, which is now unified under Linda Yaccarino for all the cable channels, all broadcast, and all digital, she is currently not only allowing advertisers to sell across all those platforms, but to do so in a way that’s informed by information or complemented by target ability on the Comcast side, which is obviously a very, very unique product in a world, where advertisers want to marry the proven storyteller – storytelling of a television spot with a target ability of the Internet. So she is in the market with those products right now. They are doing very well. And those products are going to get more sophisticated, as we complement them with more information, more set-top box data et cetera.

Thank you.

Next question please.

Your next question comes from the line of Phil Cusick with JPMorgan. Please go ahead.

Hey, guys. If I can squeeze in a clarification and a question. First on -- following up on Ben’s question on the balance sheet size. We – in the past you’ve talked about the size of the balance sheet being as important as leverage and the $50 billion range being sort of the high level. But with more and more companies at $100 billion debt balance, are you more comfortable that you can ladder out maturities enough to take the balance sheet substantially higher? And then second, you mentioned programming expense coming in below 8% this quarter and the comment about continued investment rights. How should we think about that for 2016? What could accelerate growth, or we should we think about that 8% as a reasonable run rate? Thank you.

It’s Mike. On the balance sheet size or the size the debt issuance of the company, I think that continues and should continue to be a factor that we think about. It’s – we’re a large issuer and we want to make sure that through the course of time, we’re always able to carry the balances at good rates through time.

And concerning the programming costs, this is a lower quarter than usual in terms of percentage of increase. We do see that increasing will be slightly below our 8% number that we’ve given previous guidance on. And I think we’re not done with the budgeting process yet for 2016, so we’re not prepared to comment on that yet.

Thanks, guys.

Thanks, Phil. Next question please.

Your next question comes from the line of Vijay Jayant with Evercore ISI. Please go ahead.

Thanks. Just continuing from one prior question, in terms of the Internet Plus offering, can you talk about – because the step-up is pretty substantial. Can you talk about what customers do after their one-year promotional price given that you already have that experience? And I just wanted to get a sort of philosophical question about all thesis come to U..S mainland, I’m talking about 40% margins for cable companies that are one-fourth the size of Comcast, and you are already at 40%. So any thoughts about is there opportunity on the margin side on cable given some of the strategies they are contemplating? Thank you.

Concerning Internet Plus, as I mentioned, when they roll off promotional rate some people step up to higher level packages more video about 30% do. Some people roll off or churn off and some people extend in the existing to step up in their pricing. So we find it’s a attractive way of getting customers who are initially only interested in Internet onto a video product and then expand the package from there, get a foot in the door. Concerning Altice, it’s good to see others recognize the value in the cable market as we have. There is always things we can learn. They do some things – some interesting things with self-service, their IT consolidation, their structural approach, and we’re always open to learning.

Thanks.

Thanks, Vijay. Next question please.

Your next question comes from the line Brett Feldman with Goldman Sachs. Please go ahead.

Thanks for taking the question. If we could just talk a little bit about your view on the competitive environment in the video market, because if we look at some of your biggest competitors, it feels like their emphasis has shifted. Verizon is very focused on custom TV, AT&T is pivoting away from U-verse, DISH seems very interested in Sling versus its traditional product and you’ve obviously invested a lot in some of your premium offers. And so the question is, sort of, how do you feel about the competitive intensity? And then just in general, you’ve been showing improved trends year-over-year, do you feel like that’s sustainable?

I think the competitive intensity is much the same as it has been in the past. The base offers, their attractive promotional offers, but the base rate remains in the same ballpark. I think, different people are trying different things. We feel the X1 platform is something we can build on. It – there’s greater viewership. There’s more VOD consumption, both transactional and non-transactional. The churn reduction is significant and there are more AOs, more DVR usage. So we’re investing behind the X1 platform, and we feel we can continue to – our objective is to continue to improve year-over-year on an ongoing basis.

I would just add that the thing that I feel good about is the video product that we’re offering has tremendous momentum. It’s the best in the market. Just – people that don’t live in Philadelphia or one of our markets when they see it, they go, wow, I wish I could get that. With the ease now of the voice remote we’ll put millions of those out in the next several quarters, and it just makes it even that much better. And our service initiatives and improvements that are being made and the reliability and on time and the network reliability, there’s a tremendous focus here, and I think that’s improving as well. And so you put all that together, I really think we have a great momentum and a good strategy.

I complement Dave Watson and the operating teams in the field who are really driving the X1 out and targeting selective segments in the offer.

20,000 a day, that’s huge push.

Great. Thanks for taking the question.

Thanks, Brett. Next question please.

Your next question comes from the line of Marci Ryvicker with Wells Fargo. Please go ahead.

Hi, thanks. And I have two questions. The first, Mike, you talked about the enterprise unit being sort of an aggregation of small businesses. So it sounds like there will not be a need for a major upgrade to the network, and there is not going to be a need for major investment there. So just want to confirm that I’m reading right from your comments. And then the second question is for Brian. And you mentioned I think during our press conference around Universal Studio Japan that this is going to be the beginning of your international expansion. So I just wanted you to just provide some more color around that comment? Thanks.

Marci, it’s Michael. I’ll start and you can finish, but on business services enterprise growth its continuation of what we’re doing, the needs are similar and we are investing and it is a big source of capital investment that you’ve seen in the recent past and that’s going to continue. But we’re going to lay around businesses of a bigger scale that have the profile the medium-size enterprises that we already have.

And I’d just add that we’re targeting the Fortune 1000 companies and other large enterprises have 300 locations or more. And if you think about it this type of enterprise customer we’re looking at entities with branches such a banks, restaurants, retailers, and we these are – those are small customers like a assembly of small customers. So we have managed services to more than 20 large enterprise customers already and already signed multiple 8 figure deals.

So one of the things that NBCUniversal does for Comcast and I think Steve, focused on it right from the gecko when we moved Jeff Shell to London was to really use this as a way to how the company look at broader opportunities not just United States but around the world. And we’re really happy with the Osaka and Japan Theme Park 51% announcement. But as we’ve said and I think that what I was really referring to was our China opportunity. We have partnership that we’re in the process of getting completed all the approvals necessary to go forward. But we are looking forward to building entire new Universal in Beijing and that’s a continuation of that – because we’re in the Theme Park business when we bought the company there were no owned assets outside the United States. And we will have perhaps the largest or one of the largest Theme Park will be China. And when you see Universal Japan its thriving business that we think we can grow and we’ve we’re in the process of putting into managing it coming from Florida there’s Chief Financial Officer of Universal Park he is going to move there and their team is really ready for these kind of opportunities and kind of hit the ground running. So there’s nothing else this much high and that we’re working on specifically like that but this is a unique opportunity and where it complements what we are going to do in Beijing.

All right. Thank you very much.

Thanks Marci. Next question please.

Your next question comes from the line of Mike McCormick with Jefferies. Please go ahead.

Hey, guys, thanks. Maybe we can just circle back on Brett’s question the competitive landscape. And more specifically talking about the recent combination of AT&T and DirecTV AT&T is out there with pretty aggressive wireless and DirecTV bundles with pretty good bounties and sort of build credits if you will. Just trying to get a sense for if you’ve seen any significant change in appetite for that combined wireless video bundle. And then just secondly on the retrans side if you can give us an update on the pacing there any risks to that trajectory?

I think on the competitive side as I said we haven’t seen a meaningful difference in approach or sub-numbers. Our churn – our numbers were the best in nine years and it’s driven by churn. So you think that if there was a very attractive offer it’s the higher churn but our churn numbers remain lower. And concerning the retrans.

Retrans, we were talking to you or Steve.

I think our retrans generally speaking are continuing on a steady curve and there’s no real lumpiness in that number.

Okay. Thanks, guys.

Thanks, Mike. Next question please.

Your next question comes from the line of Bryan Kraft with Deutsche Bank. Please go ahead.

Good morning. There seems to be some elevated activity in Washington and also in local government arenas to facilitate more fiber at the home deployment. And like in some of the Google fiber markets, it seem to be increasingly leaning toward allowing redlining. And so I guess the first I was wondering if you’ve the same assessment? And second, how much of a concern is this for you that competitors might be able to sort of cream skim and not have to serve the higher cost areas? And what are you – if you have any expectations around how that could play out, I would just be interested in any thoughts you have on that? Thank you.

Look, we – we’ve seen this is not a new thing. There were similar thoughts when the Bells were building that was not Universal. We can’t per se control that we obviously want to have as level playing field as one can. But a pro competitive strategy in our opinion is better than a pro regulatory strategy and if there’s more competition that something that where we’ve been facing for years and nothing we’re going to do to change that or want to change that I think it if anything it’s a reminder to regulators how competitive this industry is and will be in the future. And that’s why it’s so critical that we continue to perform well and sharpen our operating skills and we’re showing that.

Okay. Thank you.

Thanks, Brian. Regina, we got time for one more question.

So final question comes from the line of James Ratcliffe with Buckingham Research. Please go ahead.

Good morning. Thanks for taking the question. Just to dig into the video churn improvement you’ve been seeing how much of that is really X1 driven and how much of it is the benefit from the investment customer experience. And so how much incremental run rate is there on that both in terms of expanding X1 in terms of the customer service investments? Thanks.

I think it’s been a combination of a number of factors. One is getting people on the X1 platform is having affect on churn. The second is we have more people on contracts. And third is that there’s more people using TV Everywhere there’s third of our customers using TV Everywhere on a monthly basis. And finally I think our customer experience improvements of health significantly I mean if we can get the right customers and keep them longer it’s going to impact churn. So our customer experience things in terms of reducing phone calls, reducing truck rolls, getting things right the first time and really super serving our customers is having an impact as well.

I just want to sum up from my perspective what was so good about this quarter from where I have said is the company working really well together, it was a terrific first nine months of the year this quarter being in video the best in nine years, and broadband the best in six years. NBCUniversal would basically now had doubled the cash flow and a run rate to do that strength is across so many different parts of the company that are participating in the technology change that’s happening. As we talked about the millennials, we talk also about NBC and investments in Vox and BuzzFeed and the ability to now hopefully have advertising that can take some of our content and their content and bring it to advertisers doing all this, while still maintaining the leverage, it allows us to buyback shares and the dividend and Mike Cavanagh, joining us here and changing sort of the trajectory of that buyback in anticipation of things. And ultimately, it’s giving customers what they want and having a company with the unique set of assets that can do that. And I think we really and so many different fronts of the company did that this quarter. So were really pleased and thank you for your questions and support.

Thanks, Brian,andthanks everyone for joining us. That will conclude today’s call. Regina, back to you.

There will be a replay available of today’s call starting at 12:30 PM Eastern time, it will run through Tuesday November 3, at midnight Eastern time. The dialing number is 855-859-2056 and the conference ID number is 39613302. And recording of the conference call will also be available on the company’s website beginning at 12:30 PM today. This concludes today’s teleconference. Thank you for participating. You may all disconnect.